Mandurah Safety and Training Services Pty Ltd v Mark Cranley

[2015] FWC 7276

[2015] FWC 7276

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Mandurah Safety and Training Services Pty Ltd
v
Mark Cranley
(C2015/5602)

COMMISSIONER WILLIAMS PERTH, 22 OCTOBER 2015

Variation of redundancy pay.

[1] This decision concerns an application made by Mandurah Safety and Training Services Pty Ltd (MSTS) under section 120 of the Fair Work Act 2009 (the Act) to vary the redundancy pay one of their employees, Mr Mark Cranley (Mr Cranley), is entitled to.

[2] MSTS and Mr Cranley have had an opportunity to provide evidence and submissions regarding this application.

Factual findings

[3] MSTS provides a range of services including safety management, training, assessing and supply of safety products for the construction and mining industry in Western Australia.

[4] The evidence is that throughout the course of 2014 there was a reduction in the training some of MSTS’s clients required and as a consequence three Trainer/Assessor positions were made redundant in October 2014 directly as a result of the loss of this work.

[5] A further reduction in demand in early 2015 for MSTS’s services required a reduction in the business costs to prevent any immediate further redundancies. One cost saving measure implemented was to introduce by agreement with the remaining employees a reduction in their salary packages. In the case of Mr Cranley, around 20 April 2015 MSTS proposed and he accepted that his base salary of $135,000 per annum would be reduced to $125,000 per annum and he would no longer receive a company vehicle or fuel card.

[6] Shortly after these changes one client removed the requirement for MSTS to deliver any training conducted in Newman, in the north-west of Western Australia, which amounted to a reduction in the services previously delivered to this client of between 80% and 90%.

[7] As a consequence of this further reduction in the demand for MSTS’s services the decision was made that the position of Trainer/Assessor occupied by Mr Cranley was no longer required and would be made redundant.

[8] By letter dated 20 May 2015 Mr Cranley was advised that his position was to be made redundant with one months’ notice.

[9] Initially MSTS did not believe there were any other acceptable employment positions available for Mr Cranley. However before his months’ notice ran out MSTS identified that there was a position of Training Coordinator which could be offered to Mr Cranley.

[10] The position of Training Coordinator was offered to Mr Cranley and he accepted this position around 26 June 2015. The Training Coordinator position has remuneration of $75,000 per annum and Mr Cranley receives a company motor vehicle and fuel card, which clause 12.1 of his contract of employment says is available to him for business purposes only, plus a mobile phone and an iPad for work-related activity.

[11] The location of the employment remains the same in that Mr Cranley is based in Mandurah but will undertake duties at various clients’ sites as required.

[12] Neither party has provided any further evidence in terms of a comparison between the Trainer/Assessor position and the Training Coordinator position with regard to such matters as the hours of work, seniority or other significant conditions of employment.

[13] This application is made by MSTS based on their view that the Training Coordinator position now occupied by Mr Cranley is other acceptable employment and accordingly the Commission should agree to reduce the redundancy pay to which Mr Cranley is entitled.

Consideration

[14] Section 119 of the Act provides an employee is entitled to be paid redundancy pay if the employee’s employment is terminated at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone.

[15] Section 120 of the Act is set out below.

“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.”

[16] The section provides that if an employer obtains other acceptable employment for a redundant employee the employee may apply for the Commission to determine whether the amount of redundancy pay should be reduced.

[17] There is a long line of authority which considered the tests to be applied when determining whether an employer has obtained for an employee, what under earlier versions of the legislation was referred to as “acceptable alternative employment”. I am satisfied that “acceptable alternative employment” should be taken to have the same meaning as the words “other acceptable employment” currently used in section 120 of the Act.

[18] The tests to be applied in determining what is “acceptable alternative employment” are well established. It is a test that is to be applied objectively not subjectively. The decision in Australian Chamber of Manufacturers v Derole Nominees Pty Ltd 1 found that in considering whether alternative employment is acceptable consideration is to be given to whether the work is of a like nature as well as the location, pay arrangements, hours of work, seniority, fringe benefits, workload and job security of the alternative employment.

[19] The alternative employment does not need to be identical nor for it to be broadly comparable to the redundant position. Indeed Senior Deputy President Watson in Feltex Australia Pty Ltd v Textile, Clothing and Footwear Union of Australia 2 found that:

“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.”

[20] In this case Mr Cranley was receiving an annual salary of $125,000 when the position he held of Trainer/Assessor was made redundant. The other employment obtained for him by MSTS, the Training Coordinator position, by comparison only pays an annual salary of $75,000. The Training Coordinator position does entitle Mr Cranley to the use of a company vehicle with a fuel card however this is only for work purposes and so is not of any value to him personally. From the limited evidence provided by the parties the two positions otherwise seem to be generally similar.

[21] In my view a reduction in annual salary of 40% is a sufficiently large drop in pay so I conclude that the Training Coordinator position is not other acceptable employment. That being the conclusion there can be no reduction to the amount of redundancy pay to which Mr Cranley is entitled.

[22] Consequently this application is hereby dismissed.

COMMISSIONER

Final written submissions:

Applicant, 25 August 2015.

Respondent, 25 September 2015.

 1   Print J4414.

 2   PR974699.

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