Majestic Services Group Pty Ltd T/A Majestic Aged Care Services
[2024] FWC 1669
•25 JUNE 2024
| [2024] FWC 1669 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay
Majestic Services Group Pty Ltd T/A Majestic Aged Care Services
(C2024/3716) & (C2024/3717)
| COMMISSIONER WILSON | MELBOURNE, 25 JUNE 2024 |
Variation of redundancy pay Variation of redundancy pay
The matters now before the Commission and the subject of this decision are two applications made by Majestic Services Group Pty Ltd (the Applicant), for the variation of redundancy pay that would otherwise be payable to two of its employees associated with a contract the Applicant has in Canowindra, New South Wales. The contract is for the provision of cleaning and laundry services to the Salvation Army’s Moyne Aged Care Centre.
The applications are made in respect of Narelle Rennie and Robert Spillane, both of whom have worked at Moyne Aged Care for some time. The Applicant, trading as Majestic Aged Care Services, will cease to be required to provide services to Moyne Aged Care from 28 June 2024, when the facility will cease to be operated by the Salvation Army and instead operated by the Roshana Care Group.
The matters were the subject of an expedited hearing on Friday 21 June 2024, as the redundancies are to take place in the coming week and one of the two employees has to make a decision about whether he takes an offer of employment in relation to the continuing work.
Mr David Armstrong, Chief Executive Officer of the Applicant appeared for Majestic Aged Care Services. The two employees, Ms Rennie and Mr Spillane both attended the hearing on their own behalf. Each of the three gave evidence to the Commission about the application and their situation.
The application in respect of Ms Rennie puts forward that she commenced employment with the Applicant on 22 February 2023. Ms Rennie presently works 38 hours per week and Majestic Aged Care Services seeks to reduce the redundancy payment otherwise due to her of four weeks to nil. Ms Rennie had at the time of the hearing of the application accepted an offer of employment with the Roshana Care Group after it takes over operation of the Moyne Aged Care Centre.
The application in respect of Mr Spillane states that he commenced employment with the applicant on 9 March 2015 and that he presently works 30 hours per week. Majestic Aged Care Services seeks to reduce his redundancy payment of 16 weeks to nil. At the time of the hearing, Mr Spillane was considering an offer of employment from the Roshana Care Group but had not yet determined that he would accept the offer.
Mr Armstrong submitted to the Commission that there is not a transfer of business in relation to the situation faced by his firm or its employees. Majestic Aged Care presently employs five people at the Moyne Aged Care Centre. One of the three has resigned and another taken a job in another town, while continuing to work for Majestic Aged Care Services in relation to another contract it has. The third employee has advised that they do not wish to continue working.
Each of the five employees will be paid out their accrued entitlements which are due to be paid at the end of employment, namely accrued annual leave and long service leave to the extent that either is applicable.
The two respondents, Ms Rennie and Mr Spillane have been offered continuing work. Majestic Aged Care Services submits in respect of both employees that each will be able to continue their current role with the Roshana Care Group at the Moyne Aged Care Centre. Mr Armstrong said that he made representations to the Roshana Care Group about each of the people his business employed and recommended then for ongoing employment. The decisions to engage staff though have been made entirely by the Roshana Care Group at arm’s-length to him.
Ms Rennie said to the Commission that she was not automatically offered employment by the Roshana Care Group. Instead, she had to complete an application form and meet briefly by telephone on two occasions, initially with a human resources representative and on the second occasion with the HR person and their superior.
Ms Rennie has been employed on a full-time basis in the past. The offer of employment to her from Roshana was made on the basis that she work full-time, with it then being said to her that the hours would be as they have been in the past “for the time being”. She understands from this statement that her working hours may be subject to change at some time in the future. Ms Rennie was uncertain about her accrued sick leave entitlement.
Mr Spillane said to the Commission that he had been offered employment by the Roshana Care Group but did not need to go through an application process other than speaking to the HR representative by phone. Mr Spillane estimated his personal leave accrual with Majestic aged care to be about 200 hours.
APPLICABLE LEGISLATION
The applications are made pursuant to s.120 of the Fair Work Act 2009 (the Act), which provides the following;
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.
CONSIDERATION
Section 120 provides for the variation of redundancy pay in either of two circumstances; the first being that the current employer has obtained other acceptable employment for the employee and the second being that the current employer cannot pay the redundancy payment otherwise due to the employee. The second of these alternatives, an inability to pay the redundancy pay, is plainly not operative in this particular matter.
The principles relating to the variation of redundancy pay for reason of an employer obtaining other acceptable employment are now well established. I am satisfied that the employment proposed to Ms Rennie and Mr Spillane amounts to “other acceptable employment”; the work itself is the same, as are the pay and conditions.
In relation to whether that employment was obtained by Majestic Aged Care Services, it is to be noted that obtaining employment for an individual means to procure another employer to make an offer of employment, which the individual may or may not accept as a matter of his or her choice.[1] An employer “obtains” other acceptable employment when it acquires or gets the employment by its conscious, intended acts.[2]
In this case, the evidence from Mr Armstrong shows that the situation was dealt with somewhat informally. Initially he spoke to a representative of Roshana Care Group who thought they would keep the employment contracts going. A day or two later the incoming operator advised that they would not simply keep the existing employment contracts going, however the Roshana Care Group representative inquired whether any of the staff presently employed would be prepared to work for Roshana. Mr Armstrong said he would speak to the staff involved to see if they wanted to work for Roshana Care Group and he subsequently spoke to all five employees. He then left it to the Roshana group care group to approach employees themselves.
As described above Ms Rennie and Spillane each went through a slightly different process to the point of an offer of employment being made to them, however the process applicable to each was plainly informal.
I consider the steps, informal though they were, are enough to be satisfied that Majestic Aged Care Services recommended each of its current employees to the Roshana Care Group, and in particular Ms Rennie and Mr Spillane and that the process of recommendation directly led to the offers of employment being made to them. There is nothing unusual about an incoming business operator wanting to satisfy itself about possible continuing employees, and the process engaged in by Roshana appears to be efforts to conduct due diligence before making employment offers. Those things are not incompatible with an outgoing employer procuring offers of employment from an incoming operator, such as in this case.
Having established these matters, I am then required to give consideration to whether the redundancy pay, otherwise due to Ms Rennie and Mr Spillane, should be varied. I note that my decision in this respect is a matter of discretion on my part, having established the threshold eligibility for the making of the s.120 application, with any variation to be to an amount the Commission “considers appropriate”. In considering whether the amounts of redundancy pay should be varied, I take account of the following:[3]
The statutory definitions of “service” and “continuous service” set out in s.22 of the Act. reinforce that where there is a “transfer of employment” recognition of service with the outgoing employer by the incoming employer would usually disentitle the employee to the statutory redundancy payment;
The purpose of the statutory redundancy entitlement is primarily to compensate the employee for loss of nontransferable credits, especially long service leave;
The statutory redundancy entitlement has no “income maintenance” purpose and is not intended to address job search needs or assist an employee through a period of unemployment.
The material before the Commission in respect of Ms Rennie shows that she works for Majestic Aged Care Services on a full-time basis, 38 hours per week. Ms Rennie is employed under the Aged Care Award 2010. Her employment to date has been for not much more than one year, having originally commenced with the applicant on 22 February 2023. Her current personal leave accrual, while uncertain appears to be very low, potentially driven by the relatively short amount of service she has to date. In discussions with Roshana Aged Care, it appears that her current full-time employment status, as well as the hours she actually works, could have the potential for change at some unknown future point.
In relation to Mr Spillane, the material before the Commission shows that he too was employed under the Aged Care Award 2010. He presently works on a part-time basis for 30 hours per week. Having been employed by Majestic Aged Care Services for more than eight years, he will be paid upon termination by the applicant for accrued long service leave, however will not be paid out for his approximately 200 hours accrued personal leave.
Taking account of these matters, as well as the matters of precedent referred to above, especially that statutory redundancy entitlements are primarily to compensate employees for loss of transferable credits without income maintenance purpose, I consider it appropriate to make a variation to the redundancy pay otherwise due to each of Ms Rennie and Mr Spillane. While the circumstances of each are materially different, owing to the considerably different length of serv--ice with Majestic Aged Care Services, I consider it appropriate to make the same reduction for each, of 25%.
In the case of Ms Rennie, her employment appears to be subject to some flux, especially if the rosters she works are changed. She also has minimal accrued personal leave and will have to start again with that accrual. Similarly, any annual leave to be paid upon termination by Majestic Aged Care Services will be minimal and she will need her accrual of that type of leave to start again. I consider on that basis there is justification for a reduction, but not an overwhelmingly significant reduction. The payment of 75% of the redundancy benefits will assist Ms Rennie in dealing with the setback which changing employer would represent.
In the case of Mr Spillane, he will lose upon the change of employer a significant amount of accrued personal leave, compensated to a degree with the payment that will need to be made to him of accrued long service leave and annual leave. As with Ms Rennie, I consider there to be no basis to make a large reduction to his redundancy pay but take the view that a reduction of 25% would recognise the payments to be made to him, as well as the fact that an offer of continuing employment has been made to him on similar if not identical conditions to his current arrangements.
An Order varying the redundancy pay of each of Ms Rennie and Mr Spillane will be issued at the same time as this decision.
COMMISSIONER
Appearances:
D Armstrong, C Trembath, N Rennie, R Spillane
Hearing details:
Friday, 21 June 2024.
[1] FBIS International Protective Services (Aust) Pty Ltd v MUA and Fair Work Commission [2015] FCAFC 90; 232 FCR 1; 250 IR 476, [18]
[2] Ready Workforce (A Division of Chandler Macleod) Pty Ltd t/a Chandler Macleod v Andrew Lowe & Ors[2022] FWCFB 173, [55], with reference to FBIS International Protective Services (Aust) Pty Ltd v MUA [2015] FCAFC 90; 232 FCR 1; 250 IR 476 at [20]
[3] Datacom Systems Vic Pty Ltd v Rasiq Khan; Siddharth Desai[2013] FWC 1327, [22] – [23].
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