Lodhia (Jayesh) Nominees Pty Ltd v Rosita Sahib

[2014] FWC 3703

[2014] FWC 3703

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Lodhia (Jayesh) Nominees Pty Ltd
v
Rosita Sahib
(C2014/4342)

COMMISSIONER GREGORY MELBOURNE, 7 AUGUST 2014

Variation of redundancy pay.

Introduction

[1] Lodhia (Jayesh) Nominees Pty Ltd (Lodhia) operates a pharmacy within the QV Centre in Melbourne’s CBD and has done so since it purchased the business in November 2010. Ms Rosita Sahib was first employed by the previous owners of the business more than ten years ago and has continued to work in the pharmacy since it was purchased by Lodhia. She has carried out a range of duties during that time but more recently has been particularly involved in servicing and operating a counter within the business offering services provided by an external health insurance provider.

[2] However, in March 2014 Lodhia informed Ms Sahib the health insurance provider was about to cease providing services from the pharmacy. She was also told she would be offered other roles in the pharmacy based on the same part-time hours arrangement and the same rate of pay.

[3] However, Ms Sahib was not interested in these roles and her employment was terminated on 24 April 2014. Lodhia subsequently made this application under s.120 of the Act arguing it has no obligation to make redundancy payments to Ms Sahib under s.119 because it offered “other acceptable employment” to her.

[4] Section 120 of the Act states:

“(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.” 1

[5] The matter was listed for hearing on 3 June 2014. Leave was granted to Mr J. Hooper of Counsel to appear on behalf of Lodhia pursuant to s.596(2)(a) and (b) of the Act on the basis that the matter involved a degree of complexity and his involvement would enable it to be dealt with more effectively. Ms Sahib elected to participate by telephone.

The Issue to Be Decided

[6] The following issues are to be determined in the context of this matter.

1. Has Lodhia obtained “other acceptable employment” for Ms Sahib as defined in s.120 of the Act?

2. If so, is it appropriate to reduce the redundancy pay entitlement otherwise due to Ms Sahib, and by what amount?

The Evidence and Submissions

[7] Lodhia submits that when it purchased the pharmacy business Ms Sahib was employed in the role of ‘Pharmacy Assistant’ on a permanent part-time basis involving thirty hours per week. At the time her “duties were split between general pharmacy assistant duties and duties related to the pharmacy operating a service for BUPA”. 2 However, the evidence of Mr Lodhia confirmed that over time Ms Sahib became more involved in the health insurance work and in the last few months of her employment it represented approximately 80 percent of her duties.

[8] Lodhia submits that in early February 2014 Ms Sahib indicated she intended to retire in September 2014. In March it also became aware that BUPA wished to end its involvement with the business as it no longer intended to market its services through the pharmacy.

[9] Lodhia submits that on 24 March:

“a. The Applicant informed the Respondent that BUPA was going to cease offering services through the pharmacy effective 16 April 2014;

b. The Applicant told the Respondent that she was welcome to continue working for the Respondent on the same hours and pay, and that there were other consultant duties that she could perform at the pharmacy for Jurlique Cosmetics as a replacement for the BUPA consultant duties;

c. The Applicant told the Respondent that she was not interested in the alternative duties.” 3

[10] It further submits that on 4 April 2014:

“a. The Applicant provided a letter to the Respondent ...confirming the offer of a position of pharmacy assistant "with the same hours and pay" and "with a view to becoming a Jurlique Consultant".

b. The Respondent notified the Applicant that BUPA wasn't removing its business until 24 April 2014 and it was agreed that the revised termination date would be 24 April 2014;

c. The Respondent told the Applicant that she wasn't interested in the Jurlique duties or any other position with the Applicant, and that she would discuss this further on her return from Easter holidays.” 4

[11] Mr Jayesh Lodhia is the owner and operator of the pharmacy and provided a witness statement in support of the application. It included as an attachment a letter dated 4 April from him to Ms Sahib stating:

“As per our conversation today your position as a BUPA consultant will cease on 16th April 2014 and I will offer you a position with same hours and pay as a pharmacy assistant with a view to becoming the Jurlique consultant.

If you do not wish to take this offer then your position becomes redundant from 17th April and I will pay you your final redundancy pay on the next pay cycle.” 5

[12] The Commission raised the content of this letter with Counsel for Lodhia during the proceedings and sought clarification, in particular, about the reference to redundancy payments being available. It was submitted in response that any reference to a commitment to make redundancy payments was made in error, and made prior to appropriate legal advice being obtained. It submitted in response:

“He’s had no advice at this stage and then he’s endeavoured, you know, at this time and beyond this time to accommodate the respondent with an ongoing role and he’s finally received some advice from his solicitors and become aware that, you know, redundancy pay in certain circumstances like when the employer has obtained, or in this case it’s the same employer offering duties, which should definitely satisfy the definition of obtaining alternative employment and we’d say acceptable alternative employment.

I mean, this is just a naïve statement of an incorrect position which has been corrected prior to anything final and fatal and operative occurring, so we would say that, yes, in relation to the respondent reading that on 4 April and thinking, ‘Right, now I’ve got a definite entitlement to a redundancy payment,’ that is not the correct position and not one that the Fair Work Commission should indulge.” 6

[13] However, Lodhia also submitted that on 17 April it advised Ms Sahib that if she remained in employment at the pharmacy, “it could offer her alternative duties” and that it would not be offering her a redundancy payment. 7 However, Ms Sahib was not, in its submission, prepared to accept any other position despite the offers that had been made to her and therefore her employment was terminated on 24 April 2014.

[14] Lodhia referred to a number of authorities in support of its application including the decision of Deputy President Sams in Spotless Services Australia Limited (Spotless Services). 8It submits thatthe Deputy President in that matter, based on a review of the relevant authorities, set out the principles to be applied when determining applications under s.120 of the Act. In its submission the principles distilled by the Deputy President include :

“a) the determination of what constitutes acceptable alternative employment is an objective exercise;

b) mere rejection by the employee of alternative employment does not make it objectively unacceptable;

c) comparable or equivalent pay and conditions, including hours of work and continuity of service are important and relevant considerations;

d) to be acceptable, the new employment would need to take account of the employees’ skills, seniority, experience and capacity to perform the job;

e) the location and additional travel times to and from work are a relevant consideration. For example, an offer of reemployment to another State would not ordinarily be found to be ‘acceptable employment’;

f) ‘acceptable employment’ need not be identical employment and may still be considered acceptable, notwithstanding there might be additional inconvenience or a detrimental alteration to the terms and conditions of employment;

g) employees should not unreasonably refuse offers of alternative employment merely because they wish to access the benefits of redundancy pay.” 9

[15] Lodhia also provided a comparison of the position Ms Sahib was in prior to the health insurance provider withdrawing from the pharmacy, and the positions she was offered but subsequently refused. In its submission:

“A comparison of the employment prior to termination and the alternative employment offered reveals the following features:

a. It was on the same pay;

b. It was for the same number of hours per week;

c. It involved the same pattern of days and hours worked per week;

d. It was offered with continuity of service;

e. It took account of the Respondent's skills, seniority, experience and capacity to perform the job;

f. It was at the same location;

g. 50% of the role was identical, in that it was composed of the standard duties of assisting in a pharmacy;

h. 50% of the role was substantially similar, in that it involved operating as a consultant from the pharmacy for a third party advising upon and selling the third party's products;

i. There was no detrimental alteration to the terms and conditions of employment;

j. The only change to the role was that the Respondent would be involved in selling and advising on Jurlique products rather than BUPA products to customers of the pharmacy.

Further, the Applicant made a substantial effort to retain the Respondent's employment by discussing with her variations of her role that, if she had accepted such variation, would have resulted in the Applicant's employment continuing on terms and conditions at least as good as those she was on at the time of termination. Such variations put forward by the Applicant of an ongoing role for the Respondent included:

a. A role composed of 50% pharmacy assistant duties and 50% Jurlique consultancy duties; or

b. A role composed of pharmacy duties and potential duties in relation to both Jurlique and other cosmetic company consultancy duties; or

c. A role involving running the pharmacy's medical centre counter.” 10

[16] In its submission the circumstances involve a clear case of an offer of “other acceptable employment” as Ms Sahib had been employed both as a pharmacy assistant, and to perform duties in relation to the health insurance consultancy, and this was confirmed by her contract of employment and position description. In its submission Lodhia was entitled to direct her to take on the additional pharmacy assistant duties. In addition, she had specific qualifications and experience in regard to the work involving the cosmetics counter and, in any case, the supplier offered additional training and support at no cost.

[17] Ms Sahib confirmed she had worked in the pharmacy for seven years before it was acquired by the present owners. She describes her position in the pharmacy with the new owners as “BUPA Health Insurance Coordinator” and submits this position has now been made redundant, following the decision by BUPA to stop selling its services through the pharmacy.

[18] She submits that in February she began planning for a period of long service leave she intended taking later in the year. She made enquiries with the health insurance provider about obtaining a replacement while she was away but could get no response. She was subsequently advised by Mr Lodhia in April that the health insurance counter would be closing. She indicated she was disappointed by this decision as she had enjoyed her work in that role.

[19] Ms Sahib acknowledged that Mr Lodhia had offered her several options in terms of ongoing work in the pharmacy based on the same hours of work and the same rate of pay. These options included work as a pharmacy assistant, work on a counter as a cosmetics consultant, and a possible future role in conjunction with the operation of a medical clinic. However, in her submission these were not acceptable options. The pharmacy assistant role meant being on her feet all day, which could inflame a back condition. The cosmetic counter role was still to be established and she was not adequately trained to do that work and, finally, the possible opening of the medical clinic was still to be confirmed.

[20] Ms Sahib also stated that when servicing the health insurance counter she would assist on the shop floor when the counter was quiet. However, in recent times it had become increasingly busy to the extent that she estimated she was spending 90 percent of her time on work involved with the health insurance counter. She also stated that the offer of work as a pharmacy assistant was “not in any way similar in job description” to the work she had been performing previously. 11 She also stated that if she had been offered a similar administrative role to the work on the health insurance counter she would have accepted.

[21] Ms Sahib also acknowledged that she did discuss her possible retirement at some point in the future with Mr Lodhia, but did not specifically indicate she would be retiring in September. She also confirmed that her intention at the time was to take a period of long service leave prior to her retirement.

[22] She also stated in cross-examination that if the pharmacy had offered an appropriate position to her she would have accepted that offer, but her preference was to perform “administrative duties,” rather than working on the pharmacy floor. She also acknowledged in cross-examination that her job title involved the description of pharmacy assistant and from “time to time” she performed these duties. She also indicated in cross-examination she had been trained in the past as a beauty therapist, although that training was undertaken some time ago.

Consideration

[23] There is nothing to suggest Ms Sahib has been anything but a loyal and long-standing employee. She has worked in the pharmacy for apparently three different owners of the business over a period of more than ten years. In more recent times she has been involved to a greater extent in what she describes as “administrative duties”, primarily associated with servicing customers accessing services provided by a health insurance provider located within the pharmacy. At the same time Ms Sahib acknowledges she continued to work as a pharmacy assistant when not working at the health insurance counter, and her contract of employment and job descriptions still make reference to her role as a pharmacy assistant.

[24] Lodhia in its submissions made reference to the decision of DP Sams in Spotless Services and his conclusions about the principles to be applied in determining what “acceptable employment” is. In coming to these conclusions DP Sams referred particularly to the decision of Lawler VP in Datacom Systems Vic Pty Ltd v Rasiq Khan; Siddharth Desai 12(Datacom) and the Full Bench decision in the National Union of Workers v Tontine Fibres13(Tontine).

[25] I am satisfied, firstly, that the principles DP Sams set down in Spotless Services do represent the appropriate approach to be applied in the determination of this matter. I am also satisfied the following principles set out in that decision are of particular relevance to the determination of this matter:

• Determining what constitutes acceptable alternative employment involves an objective exercise.



• Mere rejection by the employee of the alternative employment does not make it objectively unacceptable of itself.



• Comparable or equivalent of pay and conditions, including hours of work and continuity of service are important and relevant considerations.



• To be acceptable the employment needs to take account of the employee’s skills, seniority, experience and capacity to perform the role.

[26] There are several matters that are of particular relevance the determination of this matter. Firstly, Ms Sahib was offered ongoing work in the pharmacy at the same location, at the same rate of pay, and with the same part-time work arrangements, as were in place prior to the decision by the health insurance provider to withdraw its services from the pharmacy. None of this is in dispute.

[27] Secondly, Ms Sahib’s job description and contract of employment still made reference to work as a pharmacy assistant and, by her own acknowledgement, she still worked on the pharmacy floor when not working at the health insurance counter. However, it is also acknowledged that in the last few months of her employment Ms Sahib spent most of her time working at the health insurance counter. She says this involved around 90 percent of her time and Mr Lodhia acknowledges that it comprised at least 80 percent of her work. The increasing amount of work in recent times in this role appears to have been due to the fact the health insurance provider was increasingly withdrawing its services from pharmacies, as part of a changed business model, meaning additional demand for these services was being generated in the short term in pharmacies where those services were still being offered.

[28] It is also evident that Ms Sahib’s clear preference was to continue to work in what she describes as “administrative duties,” such as the work involved with the health insurance counter.

[29] I am also satisfied that following the decision by the health insurance provider to withdraw from the pharmacy Mr Lodhia and Ms Sahib had discussions about her ongoing role in the pharmacy and three possible options were canvassed in those discussions. Firstly, a role that involved a greater proportion of work as a pharmacy assistant. Secondly, a consultancy role at a dedicated cosmetic counter and, finally, work with the possible introduction of a medical practice that might be somehow associated with the pharmacy. It is also evident Ms Sahib was not prepared to take up any of these offers. She stated that the pharmacy assistant role would be too physically demanding and potentially exacerbate a back condition she suffered from, (although Mr Lodhia said she had never raised any issues to do with her back condition while employed.)

[30] She also questioned whether she was able to take on the cosmetics consultancy role, although she had been trained in this work in the past, and further training and support was available and provided at no additional cost by the product supplier. She finally had concerns about whether the work associated with the medical practice would actually eventuate as it had not been confirmed at the time of her discussions with Mr Lodhia.

[31] Section 120 of the Act requires that “other acceptable employment” be obtained if the obligations in s.119 are to be set aside. I am satisfied the offers made by Mr Lodhia fall into this category and do constitute “other acceptable employment.” There is no question about the work being at the same location, at the same rate of pay, and with the same part-time working hours arrangements maintained. There would also be no break in Ms Sahib’s continuity of employment and all her accrued entitlements would be preserved.

[32] However, it is also acknowledged that each of the proposed roles had issues that needed to be worked through. Ms Sahib raised issues about the physical demands of the pharmacy assistant role, although Mr Lodhia indicated he was not previously aware of this issue, but was prepared to work around it. The cosmetic consultancy role required training and support, but this was apparently available and Ms Sahib had some previous training in this work. In addition, the work associated with the medical practice was still to be confirmed at the time it was raised with Ms Sahib, but presumably other options, including possible redundancy, might have arisen if that role did not actually come to fruition.

[33] DP Sams in the decision in Spotless Services made reference to the principles established to determine what constitutes “other acceptable employment.” It is clear it involves a test that is to be applied objectively, and is not based simply on whether the employee wishes to take on the role or not. Those authorities have also confirmed that factors such as the work being of like nature, the location, pay arrangements, hours of work, workload and job security are all relevant considerations in this context. However, the “other acceptable employment” need not necessarily be identical employment, and might even be on terms that are less advantageous to that of the previous position. As VP Lawler concluded in Datacom:

“Other employment does not cease to be “acceptable” merely because it is on terms that are less advantageous to that of the terminating position. Tontine makes it clear that there are matters of degree involved.” 14

[34] There is no question that Ms Sahib was a long-standing and valued employee who had become accustomed to the work involved in servicing the health insurance counter. It is also acknowledged this work had assumed a greater proportion of her time in recent months and she got particular enjoyment and satisfaction from it. It was clearly the type of work she wanted to continue to be involved in, if possible. However, I am also satisfied other roles were offered to her at the same location, based on the same employment conditions, and maintaining her continuity of employment and accrued entitlements. I am satisfied they were roles she was capable of performing and would have provided her with ongoing employment. However, Ms Sahib declined to take up these offers.

[35] I am accordingly satisfied the test of obtaining “other acceptable employment” has been met. In addition, Ms Sahib’s rate of pay was to be maintained and her continuity of employment preserved if she accepted the offers made to her. I am therefore satisfied, in all the circumstances, Lodhia should be relieved of any obligation to make redundancy payments to Ms Sahib. An order to this effect will be issued.

COMMISSIONER

Appearances:

James Hooper of Counsel appeared on behalf of the Applicant.

The Respondent appeared by telephone on her own behalf.

Hearing details:

2014.

Melbourne:

3 June.

 1   Fair Work Act 2009 (Cth) at s.120

 2   Applicant’s Outline of Submissions dated 19 May 2014 at para 7(a)

 3   Ibid at para 10

 4   Ibid at 11

 5   Exhibit H1 at attachment B

 6   Transcript at PN276-277

 7   Above n. ii at para 12

 8   [2013] FWC 4484

 9   Ibid at [14]

 10   Above n.ii at para 18-19

 11   Exhibit S1 at para 10

 12   [2013] FWC 1327

 13   [2007] AIRCFB 1016

 14   Above n.xiii at [9]

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