Life Space Group Pty Ltd
[2022] FWC 2437
•2 NOVEMBER 2022
| [2022] FWC 2437 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.120—Redundancy pay
Life Space Group Pty Ltd
(C2022/3714)
| COMISSIONER MIRABELLA | MELBOURNE, 2 NOVEMBER 2022 |
Variation of redundancy pay.
On 28 June 2022, Life Space Group Pty Ltd (LSG) made an application (the application) to the Fair Work Commission (Commission) under s.120 of the Fair Work Act 2009 (the Act) seeking to vary the amount of redundancy pay payable to Ms Megan Johnson (Ms Johnson), Ms Nena Manalo (Ms Manalo), Ms Bobbi Jo McLean (Ms McLean), Ms Victoria Preddy (Ms Preddy), Ms Maylene Pring (Ms Pring), Ms Sukhjit Sandhu (Ms Sandhu), Ms Thi Kim Nguyen Vo (Ms Vo) and Ms Hilda Jeremiah (Ms Jeremiah) (the Respondents), who had their employment terminated by reason of redundancy, to zero. As of 20 October 2022, the matter had settled in respect of all the Respondents except Ms Preddy. This decision concern’s LSG’s application to reduce Ms Preddy’s redundancy pay to zero.
Background
· Ms Preddy worked for 5.73 years on a full-time basis, initially employed by Ultra Mix (Aust) Pty Ltd (Ultra Mix), to work at their manufacturing facility located at 6 McArthur Street, West Footscray (West Footscray site). On 15 August 2017, LSG was registered as the parent company of Ultra Mix.
· On 27 June 2019, Ms Preddy signed a new employment contract changing her employer from Ultra Mix to LSG.
· By late 2019, LSG says it informed Ms Preddy of its intention to relocate its operations from the West Footscray site to a new facility.[1] Ms Preddy says that it was in late 2020 that she heard through conversations with other staff members of “a rumour” that LSG was planning to relocate all staff to a new facility.[2]
· On or about 15 January 2021, an email was sent by LSG’s Head of Human Resources, Ms Melanie Barlow, informing Ms Preddy that a new site had been secured at 74-86 Garden Road, Clayton (Clayton site) with an estimated completion date of no earlier than the first half of 2022.
· The email acknowledged that the new location would add to the commute to and from work, that LSG was investigating measures to assist with this change and that there would be no redundancies.
· In November 2021, Ms Preddy received a letter from LSG, dated 18 November 2021, foreshadowing the payment of a $5,000.00 annual travel allowance and reimbursement of toll charges, in recognition of the additional travel costs that she would incur whilst travelling to and from the Clayton site. This would remain in place for the first twelve months of working at the new site and would be reviewable on an annual basis thereafter. In that same letter, Ms Preddy was also offered a retention bonus of $5,880.00.
· There is agreement between LSG and Ms Preddy that the only change to Ms Preddy’s employment is the location from the West Footscray site to the Clayton site. Her rate of pay, hours of work, duties and responsibilities, job title, seniority, workload, job security, continuity of service and accrual of benefits were all to remain the same.
· Around late March 2022, Ms Preddy had a discussion with LSG’s Packaging Manager, Mr Paolo Robillos. He asked whether Ms Preddy would take LSG’s offer. She replied that she felt it was an unreasonable request and declined the offer.
· In early May 2022, Ms Preddy and Mr Robillos spoke again. She expressed that she would not be taking the offer.
· On 3 June 2022, Mr Robillos gave Ms Preddy a letter with a “Deed of Variation of Employment Contract” attached. He requested that she sign and return it if she intended to move to the Clayton site. Ms Preddy maintained her position that she did not want to accept the relocation offer.
· On 27 June 2022, Ms Preddy received a letter from LSG stating that her position was made redundant.
· On 28 June 2022, LSG made an application to the Commission to vary the amount of redundancy pay payable to the Respondents.
This matter was the subject of a conference before me on 7 July 2022.
On 20 July 2022, I issued directions for the filing and service of submissions and evidence.
On 12 August 2022, the matter was heard before me with a further hearing subsequently scheduled for 21 October 2022.
On 13 October 2022, the UWU informed the Commission that it was in the process of settling the matter with LSG in respect of all the Respondents save for Ms Preddy.
On 20 October 2022, LSG informed the Commission that it had reached a settlement with 7 of the Respondents save for Ms Preddy and that it discontinued the application in relation to those 7 Respondents. The hearing proceeded on 21 October 2022 with Ms Preddy as the sole Respondent.
Submissions of LSG
At the hearing, LSG abandoned its submission regarding Ms Preddy’s increased travel time to the Clayton site and adopted the calculations in Ms Preddy’s submissions.
LSG’s primary submission is that Ms Preddy’s redundancy pay should be reduced to nil, as she was offered “other acceptable employment” which she rejected.
Further, LSG submits that should the Commission not be inclined to reduce Ms Preddy’s redundancy pay to nil, Ms Preddy should be awarded no more than 25% of the redundancy pay calculation, in accordance with Application by Catholic Healthcare Limited[3] (Catholic Healthcare).
LSG submits that the method that Commissioner Johns uses in Catholic Healthcare[4] in relation to difference in duties should be taken in relation to differences in locations. Therefore, LSG submits that Ms Preddy should have her redundancy pay reduced by at least 75% and be awarded no more than 25% of the entitlement.
LSG supports its submissions by relying on the matter of Application by Spotless Services Australia Limited[5] (Spotless Services) and the matter of ASG Maintenance Pty Ltd v Robert Lord[6] (ASG Maintenance).
LSG submits that the alternative employment obtained for Ms Preddy satisfies the meaning of “other acceptable employment” under s.120(1)(b)(i) of the Act in that the alternative employment differed only in respect of the additional travel distance and time required to attend the Clayton site. LSG submits that the additional travel time and distance for Ms Preddy is not unreasonable in the circumstances.
LSG further submits that Ms Preddy made little or no contribution to discussions with LSG and did not identify or suggest any other options to mitigate against the additional travel time or distance. It submits that Ms Preddy simply rejected the offer of alternative employment on the basis that it was unacceptable to her.
Submissions of Ms Preddy
Ms Preddy submits that the offer of employment was not “other acceptable employment” within the meaning of s.120(1)(b)(i) of the Act.
She does not dispute that there have been no changes to her rate of pay, weekly hours of work, seniority, job security, continuity of service, accrual of benefits or probationary period. However, she submits that due to the work location changing from West Footscray to Clayton, the following factors impact on her employment:
· Effects associated with the additional costs of travel to and from Clayton;
· Effects associated with the additional travel time to Clayton;
· Effects on Ms Preddy’s caring responsibilities to her daughters and her relationship with her husband and her daughters; and
· Personal costs associated with reduced family and leisure time.
She submits that the provision of a travel allowance payment and tolls reimbursement (support initiatives) is insufficient to address her concerns. A key concern for her was that the travel allowance would only be in place for 12 months and that after this period, it would be at LSG’s discretion as to whether the allowance continues.
Additionally, Ms Preddy notes that support initiatives were not included in the new contract she was provided and were merely a policy of LSG. She submits that clause 21 of her current contract specifies that policies are not binding on LSG.
She, therefore, submits that the support initiatives should not be considered as part of the assessment of whether the alternative employment was “other acceptable employment” because such initiatives were not terms or conditions of the offered employment, but rather were policies of LSG which were discretionary and not binding on LSG because of clause 21 of Ms Preddy’s contract.
Ms Preddy further submits that confining consideration of “other acceptable employment” is supported by the High Court of Australia’s decision in Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) v Personnel Contracting Pty Ltd.[7]
Ms Preddy submits in the alternative that if the Commission does consider the support initiatives as part of its assessment of whether the alternative employment was “other acceptable employment”, there is no reason that the Commission should assume that the support initiatives would extend beyond 12 months and, indeed, no reason to assume that they would be available to Ms Preddy indefinitely.
She submits that when LSG decides to discontinue the support initiatives, substantial cost would be borne by her.
Ms Preddy has provided an estimate on her costs, were she to commute to Clayton from her current address. These costs were calculated based on the best available route according to the Google Maps service at the particular time of day that she would be travelling.
The estimated cost is calculated by reference to the Commonwealth Commissioner of Taxation’s decision under subsection 28-25(4) of the Income Tax Assessment Act 1997 (Cth), LI 2022/24, which is an instrument setting out the appropriate rate for “cents per kilometre” income tax deductions for work-related car expenses. She submits that subsection 28-25(5) explicitly requires, in setting that rate, having “regard to the average operating costs for the cars to be covered by that rate”. At present, the rate is $0.78 per kilometre.
Ms Preddy submits that per year she would be travelling an additional 14,544 kilometres which comes to $11,344.32 per year. Her calculations assume she drives 5 days per week for 48 weeks of the year. The kilometres travelled and the cost calculation was not disputed by LSG.
Ms Preddy submits that costs associated with a change in location to Clayton do not support a finding that the alternative employment was “other acceptable employment”, because the result of that employment would have been an overall net reduction in the wages earned by her for her work.
Ms Preddy provides estimations based on the actual times that she would be driving to and from work. Using Google, she determines that it takes her 30 to 45 minutes to commute to the West Footscray site and it would take 55 to 80 minutes to commute to the Clayton site. Additionally, on her commute home, it takes her 30 to 40 minutes to commute from the West Footscray site and it would take 55 to 65 minutes to commute from the Clayton site.
Ms Preddy also submits that due to having to commute from the west of Melbourne to the southeast of Melbourne, there is a higher probability of delays occurring.
Ms Preddy also states that she ordinarily finishes work at 11:00pm and if she were to do so at the Clayton site, she would not be home until between 11:55pm and 12:05am. She further states that she wakes up at 6:30am to get her daughters ready for school. Ms Preddy submits that commuting to Clayton would impact on her caring responsibilities because she would either forgo sleep in order to manage those responsibilities or, alternatively, would need to make different care arrangements for her daughters.
Ms Preddy supports her submission that I should consider her increased travel time with reference to Eagers Automotive v Trevor Varcoe (Eagers).[8]
Ms Preddy submits that this matter should be differentiated from Spotless Services and ASG Maintenance, identifying the following differences between this matter and in Spotless Services to be as follows:
· In Spotless Services, the employees’ contracts of employment contemplated the potential for relocation to new regions. Here, Ms Preddy’s contract of employment does not have a similar general relocation clause.
· In Spotless Services, the employees were travelling in a “semi rural” area. Here, the travel would be through the centre of a major metropolitan city.
· Spotless’ catering business was reliant on the winning and losing of client contracts. This established a consideration that the employees must have understood that their employment would not continue forever but was contingent on the client contracts available to Spotless. Here, Ms Preddy did not work in a contract industry. Rather, she worked for a pharmaceutical manufacturer, and would not generally expect to have her employment relocated.
She identifies the following differences between this matter and ASG Maintenance to be as follows:
· In ASG Maintenance, the terms of the respondent’s contract of employment contemplated that significant travel might be required, including the requirement to spend days away from his usual place of work because of the project nature of the business. Here, Ms Preddy’s contract contemplated travel “from time to time in order to perform the duties of the Position, without any additional remuneration”.
· The applicant’s business was in a rural location. Here, Ms Preddy’s work is in a major metropolitan city.
Ms Preddy alternatively submits that if I find LSG’s offer to be “other acceptable employment”, that the following be taken into consideration when assessing the equity, good conscience and merits of the matter:
· Ms Preddy and the former Respondents originally sought to engage in enterprise bargaining with LSG. However, LSG refused to bargain. Ms Preddy submits that LSG’s failure to engage in meaningful negotiations that would have squarely dealt with the relocation to Clayton indicates that LSG was unwilling to make any changes in its offer of employment at the Clayton site.
· LSG management previously advised there would be pay rises and reduced days of work which were not acted on.
· Ms Preddy lost her accrual of long service leave, the balance of which was close to reaching 7 years total accrual.
Ms Preddy finally submits that the Commission should not apply the rule in Catholic Healthcare. She submits that the circumstances of changing duties as opposed to changing work location is sufficiently different for Catholic Healthcare to not apply.
She therefore submits that LSG’s submission that her redundancy entitlement be reduced to 25% of the entitlement is inappropriate in the circumstances.
Reply submissions of Life Space Group Pty Ltd
LSG submits that I should not take into consideration the previous attempts of the UWU and LSG’s employees to engage in enterprise bargaining. LSG submits that the bargaining had no impact on LSG’s decision to move its workforce to the Clayton site. Additionally, it submits that I should not take into consideration the other matters described in paragraph 32 above.
LSG submits that while it is true that the support initiatives were not included in the proposed employment contract, they were also not present in LSG’s company policies.
LSG submits that they were a verbal contractual agreement made between each eligible employee and LSG. Further, LSG submits that clause 21 of the employment contract simply states that policies do not form part of the employment contract. It submits that it does not classify such benefits as being attached to any policy and it would not be reasonable to argue that they are.
LSG submits that as the support initiatives were part of a contract with its employees, it should be considered in determining whether the alternative employment constituted “other acceptable employment”.
LSG submits that while it believes that Ms Preddy’s additional distances and travel times are not unreasonable, if the Commission finds these unreasonable, a reduction of 25% of the distance or time should be reasonable.
LSG therefore submits that the Commission should assess what percentage below the estimated additional travel time would be reasonable for Ms Preddy. It suggests that this percentage should be used to calculate the reduction to the entitlement. It suggests that if I think a 20% shorter travel time or distance would be reasonable then an 80% reduction to the entitlement would be appropriate. Likewise, if I determined that a 25% shorter travel time or distance would be reasonable, then a 75% reduction to the entitlement would be appropriate.
In response to Ms Preddy’s reliance on Eagers, LSG submits that Ms Preddy does not live in a remote location such as the respondent in Eagers.
It submits that these factors are not relevant to determining whether LSG’s offer can be considered other acceptable employment.
Legislation
Section 120 of the Act provides:
“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.”
Section 119(1) of the Act provides:
“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.”
Consideration
There is no dispute that Ms Preddy’s position with LSG is redundant and, therefore, she would ordinarily be entitled to redundancy pay pursuant to s.119(1) of the Act. However, the application before me seeks an order reducing the amount of redundancy pay to zero on the basis that the employer has obtained other acceptable employment for the employee. The onus lies with LSG to provide evidence that Ms Preddy was provided with alternative employment that was acceptable.[9] I am therefore required to first determine whether the offer of employment at the Clayton site is “other acceptable employment”.
In relation to s.120 of the Act, I intend to be guided by the Full Bench of the Commission in Australian Commercial Catering Pty Ltd v Powell and Togia; Powell v Australian Commercial Catering Pty Ltd:[10]
“[37] In relation to s.120(1)(b)(i), whether alternative employment obtained by the employer is “acceptable” is to be determined objectively, not by reference to whether the employment is subjectively acceptable to the employee.24 The determination of whether alternative employment is acceptable requires an assessment and value judgment on the part of the decision-maker. 25 The employer “obtains” other acceptable employment when it acquires or gets the employment by its conscious, intended acts.26
[38] Once it is concluded that the preconditions in s.120(1) are satisfied so that s.120 is applicable, it will be necessary for the Commission to determine under s.120(2) whether the employee’s entitlement to redundancy pay under s.119 should be reduced and, if so, by how much. This requires the exercise of a broad discretionary power.27 Any determination by the Commission for a reduced amount of redundancy pay then becomes the employee’s entitlement under s.119: s.120(3).”
In Clothing & Allied Trades Union of Australia v Hot Tuna Pty Ltd, the Full Bench of the Australian Conciliation and Arbitration Commission stated:
“…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.”[11]
A helpful yet inexhaustive list of matters to be considered in the assessment of whether the offer of alternative employment is “other acceptable employment” was detailed by Deputy President Sams to include:[12]
“· 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.”
In Australian Commercial Catering Pty Ltd v Fair Work Commission,[13] the Full Bench of the Federal Court of Australia stated:
“[54] We accept that ordinarily factors such as these will be relevant to the determination of whether employment is “acceptable”. It is nonetheless true, as the employees submitted, that the determination is not made in a vacuum. Regard is to be had to the evidence of the particular circumstances of the employees. After all, the statute speaks of the employer obtaining acceptable employment “for the employee”. What might be acceptable employment for one employee will not necessarily be acceptable employment for another. The Full Bench recognised as much in Clothing Trades Award. To take one example, even where all other circumstances are equal, it is unlikely that employment obtained by an employer for an employee with a disability which prevents him or her from climbing stairs will be acceptable employment for that employee if the only access to the lavatories is via two flights of stairs.”
It is not disputed that the offer of employment to Ms Preddy only changes the employment conditions with regards to the location of work. If she had accepted the offer, Ms Preddy would have the same rates of pay, weekly hours of work, seniority, job security, continuity of service, accrual of benefits and probationary periods that she had in the role from which she was made redundant. This was confirmed in the “Deed of Variation of Employment Contract”, specifically in clause 2 titled “Variation of the Employment Contract” which changed the location of work to the Clayton site and also included the following in clause 2.2:
“2.2 For the avoidance of doubt, all other terms and conditions of the Employment Contract will remain in full force and effect.”
These factors weigh in favour of a finding that LSG obtained other acceptable employment for Ms Preddy.
It is agreed between the parties that the additional kilometres for Ms Preddy to travel to Clayton would be 60.6 kilometres a day. Over a 48-week working year, that would be an additional 14,544 kilometres. I accept the undisputed annual cost of the additional travel as per Ms Preddy’s submissions as $11,344.32. On an hourly rate of $28.98, the impact of the cost of travel as a proportion of Ms Preddy’s wages is not insignificant.
I am satisfied that LSG’s offer of a $5,000.00 travel allowance and toll reimbursement associated with the increase in costs associated with the travel to Clayton is insufficient to reasonably compensate Ms Preddy for the added expense of travelling to the Clayton site.
It is not disputed that the travel allowance and toll reimbursement are only guaranteed for the first twelve months after relocation to the Clayton site. LSG retains all discretion regarding such payments beyond the initial first year. The payments were not included in the “Deed of Variation of Employment Contract”. The discretionary nature of the allowance and reimbursement could not be reasonably relied upon as guaranteed payments beyond the first year of employment at the Clayton site.
Ms Preddy was also offered a retention bonus of $5,880.00 if she relocated to the Clayton site. Had Ms Preddy accepted the offer to work at the Clayton site, the additional costs of travel over the course of a year as calculated and set out in paragraph 52 above would still be in excess of the aggregate sum of the travel allowance and retention bonus. In any case, the retention bonus was a one-off payment and was contingent upon Ms Preddy staying with LSG until June 2023 and not connected to her incurring additional costs in travelling to the Clayton site. That is, she could have incurred the additional travel costs over several months and still be ineligible to receive the retention bonus.
These factors weigh against a finding that LSG obtained other acceptable employment for Ms Preddy.
The additional daily travel time varies between 50 minutes to 1 hour and ten minutes per day. There are a number of cases discussing acceptable travel time in the context of such applications that the parties have relied upon in support of their submissions. In this matter, the travel is undertaken in an urban environment, in a city of approximately 5 million people[14] and all that entails regarding potential traffic congestion. Ms Preddy would be required to travel from Melton West in the outer west of Melbourne to the south-eastern outer ring suburb of Clayton. I am persuaded that the increased travel time over the available routes also increase the chances of traffic delays. I am satisfied that the commuting time for Ms Preddy to and from the Clayton site has increased to such an extent that it weighs against a finding that LSG obtained other acceptable employment.
Ms Preddy’s carer responsibilities were not disputed. She shares three girls aged 9, 11 and 13 years old with her husband and they both work different shifts. Her husband works an early morning shift so Ms Preddy has responsibility for the school drop off with her carer’s day starting at 6:30am. Ms Preddy finishes her working shift at 11:00pm and if she worked at Clayton, this would mean she would return home at about midnight. I am satisfied that this would add additional pressure on her in her capacity as a joint carer for three school aged girls and on her family relationships. This weighs against a finding that LSG obtained other acceptable employment for Ms Preddy.
Conclusion
Taking all matters into consideration, I find that LSG’s offer of employment to Ms Preddy at the Clayton site was not “other acceptable employment”. Accordingly, I decline to reduce the redundancy pay to which Ms Preddy is entitled because of s.119 of the Act and I dismiss the application of LSG.
COMMISSIONER
<PR745777>
[1] Applicant’s outline of submissions dated 3 August 2022 at paragraph 1.
[2] Witness statement of Victoria Preddy dated 16 August 2022 at paragraph 15.
[3] [2019] FWC 315.
[4] Ibid, [31]-[34].
[5] [2013] FWC 4484, [5]-[6], [18], [20]-[21].
[6] [2020] FWC 5894, [10]-[12], [38]-[44].
[7] [2022] HCA 1, [44].
[8] [2021] FWC 6602, [32]-[34].
[9] Brims Tweed Frame & Trusses Pty Ltd v Phillip Jensen; Travis McGiugan [2012] FWA 9376.
[10] [2016] FWCFB 5467.
[11] (1988) 27 IR 226 (Munro and Peterson JJ, Leary C), 230-231.
[12] DRW Investments Pty Ltd t/as Wettenhalls v Timothy Richards & Other[2016] FWC 461, [183].
[13] Australian Commercial Catering Pty Ltd v Fair Work Commission [2015] FCAFC 189.
[14] “Snapshot of Victoria”, Australian Bureau of Statistics, 28 June 2022, accessed at: < by authority of the Commonwealth Government Printer
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