Mr Simon Gravenall
[2020] FWC 1410
•19 MARCH 2020
| [2020] FWC 1410 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.122 - Transfer of employment situations that affect the obligation to pay redundancy pay
Mr Simon Gravenall
(C2019/4137)
DEPUTY PRESIDENT ASBURY | BRISBANE, 19 MARCH 2020 |
Transfer of employment situations that affect the obligation to pay redundancy pay.
OVERVIEW
[1] This Decision concerns an application made under s. 122(4) of the Fair Work Act 2009 (the Act) by Mr Simon Gravenall seeking an order that Total AMS Pty Ltd t/a TAMS Group (TAMS) pay Mr Gravenall redundancy payments under s. 119 of the Act. The application also seeks that TAMS pay notice on termination of Mr Gravenall’s employment in accordance with s. 117 of the Act. Section 122 of the Act concerns transfer of employment situations that affect the obligation to pay redundancy pay. The application has some history which it is necessary to traverse.
[2] Mr Gravenall was employed by MIPEC Pty Ltd (MIPEC) in the position of Manager – Marine from 31 January 2013. 1 In or around February 2019, TAMS acquired MIPEC through what appears to be a share purchase. The precise date that the transaction was finalised is unclear. At or around the time that TAMS acquired MIPEC it also acquired another company and the three companies were “merged”. The effect of these transactions on MIPEC is also unclear.
[3] Mr Gravenall was absent from the workplace due to illness from May 2018 and did not return to work during or after the acquisition of MIPEC. There was correspondence between MIPEC and TAMS (represented by a Human Resource Management Consultant, Ms Jodie Beeson) and Mr Gravenall who was represented by Industrial Relations Claims. In the exchange of correspondence Ms Beeson variously communicated with Mr Gravenall on behalf of MIPEC, TAMS and MIPEC/TAMS.
[4] On or around 14 February 2019 Mr Gravenall was informed in correspondence sent by Ms Beeson that his position as Manager – Marine with MIPEC was redundant and that there was a position available for him with TAMS. The correspondence was on TAMS letterhead and was signed by Ms Beeson on behalf of TAMS/MIPEC and on behalf of the Managing Director of TAMS. In that correspondence it was variously asserted that the position offered to Mr Gravenall was acceptable alternative employment and that the terms and conditions of the position offered by TAMS were substantially similar to and no less favourable than the terms and conditions attaching to Mr Gravenall’s previous position with MIPEC. Mr Gravenall through his representatives disputed these assertions and sought payment of redundancy pay under s. 119 of the Act. The matter was not resolved.
[5] On 1 April 2019 Mr Gravenalls’ employment was terminated. The person who apparently terminated Mr Gravenall’s employment was the Chief Financial Officer of TAMS. On 4 April 2019, TAMS (represented by Ms Beeson) made an application to the Commission under s. 120 of the Act seeking a determination from the Commission that the amount of redundancy pay to which Mr Gravenall was entitled be reduced to nil. Before that application could be heard, TAMS withdrew it stating in correspondence to the Commission and Mr Gravenall that it was “strongly arguable” that s. 122(3) of the Act applied so that Mr Gravenall was not entitled to redundancy payments because employment on terms and conditions similar to or no less favourable than those attaching to his role with MIPEC had been offered.
[6] It was also asserted by TAMS in correspondence to the Commission and to Mr Gravenall, that if Mr Gravenall believed that s. 122(3) had operated unfairly in relation to his dismissal then he should make an application under s. 122(4) of the Act. Mr Gravenall made an application under s. 122(4) of the Act (albeit reluctantly) and it was allocated to me to hear and determine. Mr Gravenall’s application seeks an order that TAMS pay him redundancy payments under s. 119 of the Act. In the application Mr Gravenall also takes issue with the non-payment of notice on termination of his employment.
[7] After considering the material filed by the parties I have formed a provisional view that TAMS’ views about the legislative provisions concerning the entitlement of employees to be paid redundancy pay under s. 119 of the Act and the effect of s. 120 and s. 122 are misconceived. In short, TAMS has conflated the provisions in s. 120 and s. 122 and has failed to consider or address a number of fundamental preliminary issues including:
• The identity of the employer obligated to pay redundancy pay to Mr Gravenall under s. 119 of the Act when Mr Gravenall’s employment was terminated; and
• Whether there was a transfer of Mr Gravenall’s employment from MIPEC to TAMS.
[8] As a result of TAMS’ misconception, Mr Gravenall has made an application that is arguably unnecessary and which cannot achieve the outcome he seeks – that TAMS pay redundancy pay to him. TAMS has responded to the s. 122(4) application and essentially behaved as if it was Mr Gravenall’s employer and had an obligation to pay redundancy pay to him in circumstances where it is arguable that at all relevant times Mr Gravenall was employed by MIPEC. In short, an application under s. 120 could only have been made by the entity that terminated Mr Gravenall’s employment and was obligated to pay him redundancy pay and section 122 can only operate with respect to the first employer in a transfer of employment situation – arguably MIPEC and not TAMS.
[9] It is regrettable that the Human Resources Consultant to TAMS and its legal advisor did not identify what appears to be an obvious issue – the identity of Mr Gravenall’s employer at the time his employment was terminated. It is also regrettable that Mr Gravenall’s advisors did not clearly highlight this matter. This is particularly so given that there is a comment in a letter sent on 26 March 2019 by Industrial Relations Claims on behalf of Mr Gravenall to Ms Beeson on behalf of TAMS, stating: “whether our client is a transferring employee or has already transferred is a matter for another time”. With respect, that was not a matter for another time but was a matter critical to whether Mr Gravenall was entitled to redundancy pay under s. 119 of the Act.
[10] Given the stage the proceedings have reached and that Mr Gravenall is no closer to having the question of whether he is entitled to redundancy payments resolved, I set out for the consideration of the parties the legislative provisions and a discussion of how they operate. I also set out a summary of the evidence and submissions that were before me in the s. 122(4) application. After considering these matters I require the parties to respond to some questions about matters which I require further evidence and submissions, before I can determine the present application.
[11] I have taken the step of setting out my provisional views because TAMS and its advisors have made two attempts to assert that TAMS is not obligated to pay redundancy pay to Mr Gravenall. Those attempts are misconceived and have placed Mr Gravenall in a situation where he has made an application that is arguably equally misconceived. In my view before the matter progresses, the issues which I have identified should be clarified. I turn first to consider the relevant statutory provisions.
RELEVANT STATUTORY PROVISIONS
[12] Section 22(5) of the Act relevantly provides in relation to “service” and “continuous service” as follows:
“When service with one employer counts as service with another employer
(5) If there is a transfer of employment (see subsection (7)) in relation to a national system employee:
(a) any period of service of the employee with the first employer counts as service of the employee with the second employer; and
(b) the period between the termination of the employment with the first employer and the start of the employment with the second employer does not break the employee's continuous service with the second employer (taking account of the effect of paragraph (a)), but does not count towards the length of the employee's continuous service with the second employer.
Note: This subsection does not apply to a transfer of employment between non-associated entities, for the purpose of Division 6 of Part 2-2 (which deals with annual leave) or Subdivision B of Division 11 of Part 2-2 (which deals with redundancy pay), if the second employer decides not to recognise the employee's service with the first employer for the purpose of that Division or Subdivision (see subsections 91(1) and 122(1)).”
[13] Sections 22(7) – (8) are in the following terms:
“Meaning of transfer of employment etc.
(7) There is a transfer of employment of a national system employee from one national system employer (the first employer) to another national system employer (the second employer ) if:
(a) the following conditions are satisfied:
(i) the employee becomes employed by the second employer not more than 3 months after the termination of the employee's employment with the first employer;
(ii) the first employer and the second employer are associated entities when the employee becomes employed by the second employer; or
(b) the following conditions are satisfied:
(i) the employee is a transferring employee in relation to a transfer of business from the first employer to the second employer;
(ii) the first employer and the second employer are not associated entities when the employee becomes employed by the second employer.
Note: Paragraph (a) applies whether or not there is a transfer of business from the first employer to the second employer.
(8) A transfer of employment:
(a) is a transfer of employment between associated entities if paragraph (7)(a) applies; and
(b) is a transfer of employment between non-associated entities if paragraph (7)(b) applies.”
[14] The term “associated entity” is defined in s. 12 of the Act as having the meaning given by s. 50AAA of the Corporations Act 2001, as follows:
“50AAA Associated entities
(1) One entity (the associate) is an associated entity of another entity (the principal) if subsection (2), (3), (4), (5), (6) or (7) is satisfied.
(2) This subsection is satisfied if the associate and the principal are related bodies corporate.
(3) This subsection is satisfied if the principal controls the associate.
(4) This subsection is satisfied if:
(a) the associate controls the principal; and
(b) the operations, resources or affairs of the principal are material to the associate.
(5) This subsection is satisfied if:
(a) the associate has a qualifying investment (see subsection (8)) in the principal; and
(b) the associate has significant influence over the principal; and
(c) the interest is material to the associate.
(6) This subsection is satisfied if:
(a) the principal has a qualifying investment (see subsection (8)) in the associate; and
(b) the principal has significant influence over the associate; and
(c) the interest is material to the principal.
(7) This subsection is satisfied if:
(a) an entity (the third entity) controls both the principal and the associate; and
(b) the operations, resources or affairs of the principal and the associate are both material to the third entity.
(8) For the purposes of this section, one entity (the first entity) has a qualifying investment in another entity (the second entity) if the first entity:
(a) has an asset that is an investment in the second entity; or
(b) has an asset that is the beneficial interest in an investment in the second entity and has control over that asset.”
[15] In relation to transfer of business, s. 311 of the Act provides as follows:
“311 When does a transfer of business occur
Meanings of transfer of business, old employer, new employer and transferring work
(1) There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:
(a) the employment of an employee of the old employer has terminated;
(b) within 3 months after the termination, the employee becomes employed by the new employer;
(c) the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;
(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).
Meaning of transferring employee
(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.
Transfer of assets from old employer to new employer
(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:
(a) the old employer or an associated entity of the old employer; and
(b) the new employer or an associated entity of the new employer;
the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):
(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and
(d) that relate to, or are used in connection with, the transferring work.
Old employer outsources work to new employer
(4) There is a connection between the old employer and the new employer if the transferring work is performed by one or more transferring employees, as employees of the new employer, because the old employer, or an associated entity of the old employer, has outsourced the transferring work to the new employer or an associated entity of the new employer.
New employer ceases to outsource work to old employer
(5) There is a connection between the old employer and the new employer if:
(a) the transferring work had been performed by one or more transferring employees, as employees of the old employer, because the new employer, or an associated entity of the new employer, had outsourced the transferring work to the old employer or an associated entity of the old employer; and
(b) the transferring work is performed by those transferring employees, as employees of the new employer, because the new employer, or the associated entity of the new employer, has ceased to outsource the work to the old employer or the associated entity of the old employer.
New employer is associated entity of old employer
(6) There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employed by the new employer.”
[16] Part 2-2 Division 11 of the Act deals with Notice of termination and redundancy pay. There are limits on the application of the Division to certain employees in s. 123 which are not (or do not appear to be) relevant in the present case. By virtue of s. 117(1) an employer must not terminate the employment of an employee unless the employer has given the employee written notice of termination and s. 117(2) provides that the time between giving the notice and the day of the termination must be at least the minimum period specified in s. 117(3) or that the employee must be paid in lieu of the minimum period.
[17] Section 119, 120, 121 and 122 of the Act provide as follows:
“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.
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.
122 Transfer of employment situations that affect the obligation to pay redundancy pay
Transfer of employment situation in which employer may decide not to recognise employee's service with first employer
(1) Subsection 22(5) does not apply (for the purpose of this Subdivision) to a transfer of employment between non-associated entities in relation to an employee if the second employer decides not to recognise the employee's service with the first employer (for the purpose of this Subdivision).
Employee is not entitled to redundancy pay if service with first employer counts as service with second employer
(2) If subsection 22(5) applies (for the purpose of this Subdivision) to a transfer of employment in relation to an employee, the employee is not entitled to redundancy pay under section 119 in relation to the termination of his or her employment with the first employer.
Note: Subsection 22(5) provides that, generally, if there is a transfer of employment, service with the first employer counts as service with the second employer.
Employee not entitled to redundancy pay if refuses employment in certain circumstances
(3) An employee is not entitled to redundancy pay under section 119 in relation to the termination of his or her employment with an employer (the first employer ) if:
(a) the employee rejects an offer of employment made by another employer (the second employer ) that:
(i) is on terms and conditions substantially similar to, and, considered on an overall basis, no less favourable than, the employee's terms and conditions of employment with the first employer immediately before the termination; and
(ii) recognises the employee's service with the first employer, for the purpose of this Subdivision; and
(b) had the employee accepted the offer, there would have been a transfer of employment in relation to the employee.
(4) If the FWC is satisfied that subsection (3) operates unfairly to the employee, the FWC may order the first employer to pay the employee a specified amount of redundancy pay (not exceeding the amount that would be payable but for subsection (3)) that the FWC considers appropriate. The first employer must pay the employee that amount of redundancy pay.”
THE EVIDENCE AND SUBMISSIONS
[18] On 31 January 2013, Mr Gravenall commenced employment with MIPEC Pty Ltd. In May 2018, Mr Gravenall commenced a period of leave due to medical issues, that compounded after he was involved in a vehicle accident on 27 June 2018. 2 On 20 December 2018, Mr Gravenall received an email from Ms Jodie Beeson in the capacity of Human Resources Consultant for MIPEC, informing Mr Gravenall that: MIPEC was considering terminating his employment because he had been on a period of leave for more than three months; could not carry out the inherent requirements of his role; and was not fit for full duties. The letter requested that Mr Gravenall provide medical certificates and reports and advised that if he intended returning to work in the short term or his status on restricted duties changed, Mr Gravenall should provide a proposed return to work date and confirm that he could provide a fitness for work and full duties medical certificate.3
[19] On 28 December 2018 Mr Gravenall responded to Ms Beeson’s email requesting that she confirm her identity and questioning the genuineness of the email on the basis that Mr Gravenall did not know Ms Beeson. The response from Ms Beeson’s office was an out of office message. On 9 January 2019 Mr Gravenall received an email from an Administration Supervisor at MIPEC confirming that Ms Beeson had been instructed to act on behalf of and represent MIPEC in relation to employment matters. On 10 and 11 January 2019 Mr Gravenall and Ms Beeson had an exchange of emails in which Mr Gravenall confirmed his return to work date was 28 December 2018 and asserted that his work entitlements had been removed to the point that a reasonable person would see the situation as termination of employment.
[20] Ms Beeson responded on 11 January 2019 stating to Mr Gravenall that a fitness for work assessment would be organised with a MIPEC appointed medical practitioner, and confirming that Mr Gravenall was still an employee of MIPEC until a fitness for work had been conducted and the results of that assessment reviewed. Ms Beeson organised a fitness for work assessment for Mr Gravenall to be conducted in Gladstone, which ultimately did not proceed once Mr Gravenall informed Ms Beeson that he would need flights and accommodation as he was based in Brisbane.
[21] Mr Gravenall states that he received a phone call from Mr Lee Bartlett, Chief Financial Officer of TAMS on 16 January 2019. Mr Bartlett said TAMS was looking at purchasing MIPEC and asked whether Mr Gravenall was aware of this. Mr Gravenall said he had heard someone was looking but did not know the exact status as his work emails were not working. Mr Gravenall asserts he asked Mr Bartlett questions about how they were buying MIPEC and that Mr Bartlett told him they would “buy the shares and take the lot”. Mr Gravenall also states he asked Mr Bartlett about whether his role would continue, and that Mr Bartlett told him that it would and that “we won’t do anything for three months until we see how it goes.”
[22] The next piece of correspondence in the sequence of correspondence tendered by Mr Gravenall is an email from Ms Beeson dated 29 January 2019 stating that she has met with the senior management team at TAMS and that TAMS/MIPEC have revised their position in relation to the requirements for Mr Gravenall’s return to work. On 12 February 2019 Ms Beeson corresponded with Mr Gravenall informing him that she had a conference with the management team at TAMS/MIPEC that morning in relation to his return to work and would forward documentation in relation to Mr Gravenall’s “ongoing employment” shortly.
[23] At some point in February 2019 TAMS acquired MIPEC. The evidence of Mr Bartlett in relation to the acquisition is that in February 2019 TAMS Group purchased 75% of the issued share capital of WBT Holdings Pty Ltd which owned 100% of the share capital of MIPEC. As a result, through direct ownership TAMS Group became the legal majority shareholder of MIPEC, thereby “inheriting” all of MIPEC’s assets and liabilities. During the same period, the TAMS Group also acquired another Company called Taylored Offshore Solutions. Mr Bartlett states that: “all three companies were merged at the same time increasing the number of employees from 260 to 400.”
[24] On 14 February 2019 Ms Beeson sent a letter to Mr Gravenall on TAMS letterhead advising of changes at MIPEC that had “affected Mr Gravenall’s position as Manager – Marine at MIPEC”. The letter states:
“The purpose of this letter is to confirm the outcomes of a recent organisational review by MIPEC (your employer) of its operational requirements and what this means for you.
We are writing to you to advise you of recent changes at MIPEC that have effected your position as Manager – Marine at MIPEC.
As you are aware, MIPEC was recently purchased by TAMS Group. TAMS and MIPEC have now merged their operations and TAMS have taken over the day to day commercial and operation management of MIPEC.
This has resulted in a restructure of roles and responsibilities and we are now writing to regrettably advise you that your position as Manager – Marine no longer exists under the new structure.
The position of Manager – Marine Division no longer exists and this position is redundant due to the acquisition of MIPEC and the merging of TAMS and MIPEC. The M&A resulted in two similar positions and the position of Manager – Marine is no longer required.
The Company has also given consideration as to whether it is reasonable in all of the circumstances to redeploy you into any vacancies within the Company as required by the Fair Work Act 2009.
TAMS can now confirm that there is a vacancy available for you and that vacancy does not change your pay or base location and therefore it is TAMS view that it is acceptable reasonable redeployment.
An employer does not have to pay statutory redundancy pay to an employee whose position has become genuinely redundant if the employer obtains ‘other acceptable employment for the employee’.
It is TAMS view that the role of Marine Supervisor is comparable, alternative and acceptable redeployment and confirm that your pay and location will not change. The role will report to Jason Hodgson.
If you wish to accept this redeployment opportunity please confirm with us as soon as practical….”
[25] The letter concluded with an invitation for Mr Gravenall to contact Ms Beeson should he wish to provide feedback or raise alternative proposals. Ms Beeson signed the letter as “HR Consultant for TAMS/MIPEC and on behalf of Dyon Pilmoor Managing Director Total AMS Pty Ltd”. On 14 February 2019 Ms Beeson sent a position description by email to Mr Gravenall. A follow up email was sent by Ms Beeson to Mr Gravenall on 19 February 2019 in relation to the letter and the position description seeking confirmation that these had been received and informing Mr Gravenall that consultation was sought with him.
[26] On 21 February 2019, Industrial Relations Claims on behalf of Mr Gravenall corresponded with Ms Beeson asserting that the alternative role was not comparable and was a demotion and raising various issues about terms and conditions of employment and the amount of time that would be required to be spent in Gladstone if Mr Gravenall accepted the position. The letter went on to state that Mr Gravenall accepts that he has been made redundant and requested advice of the date of the redundancy and when Mr Gravenall could expect a redundancy payment. The letter concluded by stating that Mr Gravenall would defend any application under s. 120 to vary his redundancy payments and seek his costs in relation to such application.
[27] Ms Beeson’s response sent by email on 25 February 2019 advises that she will seek instructions from her client and revert as quickly as possible. Ms Beeson also took issue in her response with the fact that Mr Gravenall had not consulted with his employer prior to engaging the services of Industrial Relations Claims and stated her expectation that before accepting that he was to be made redundant, Mr Gravenall would have asked his employer questions about his entitlements rather than making automatic assumptions.
[28] On Tuesday 5 March 2019 Ms Beeson again corresponded with Industrial Relations Claims stating:
“I have now spoken with Lee Bartlett who is the Chief Financial Officer at TAMS Group. As you are aware, TAMS Group have recently acquired MIPEC and have full management responsibility for MIPEC.
…
There is very clear evidence on the basis of the acquisition that there has been significant restructuring of the workforce.
Simon’s role is redundant as TAMS have appointed Scott McDonald who is a long standing and long term TAMS manager and senior leader into the role of operations manager MIPEC.”
[29] The email went on to assert that Mr Gravenall had been offered an alternative role and that its terms and conditions and its responsibilities were not dissimilar or less favourable. It was also asserted that Mr Gravenall had: “falsely assumed in the absence of ignoring the opportunity to consult with TAMS / MIPEC (sic)” that he would lose certain entitlements. Mr Gravenall was invited to formalise in writing that he did not wish to consult with TAMS/MIPEC and did not wish to discuss some of the claims in the email from his representative Industrial Relations Claims.
[30] On 8 and 12 March Ms Beeson sent further emails seeking a response from Mr Gravenall. The second email stated that if a response was not received within 48 hours further decisions would be made on the basis of available information. The subject matter of the emails was: “MIPEC / TAMS Redundancy of client Mr Simon Gravenall”. On 18 March 2019 Ms Beeson again corresponded with Mr Gravenall (on TAMS letterhead). That correspondence relevantly stated:
“We confirm that you were advised on 13 February 2019 that the TAMS Group had acquired your employer MIPEC and your position as Marine Manager at MIPEC no longer existed.”
[31] The letter goes on to assert that a significant effort had been made by TAMS Group to discuss the acquisition of MIPEC and Mr Gravenall’s role as Manager – Marine and that Mr Gravenall had been advised that: “TAMS Group would make an offer of employment to you.” The letter further states that Mr Gravenall was advised that: “the offer of employment would be on terms and conditions substantially similar to and considered on an overall basis to be no less favourable than the role of Marine Manager”.
[32] It is further stated that Mr Gravenall was invited to consult with “us” to raise matters, ask questions and raise alternative proposals. The letter also states that Mr Gravenall’s representative has informed “us” that Mr Gravenall has a view that he has not been offered any role and goes on to state:
“Our correspondence clearly evidences the fact that you have been offered alternative employment with TAMS Group and that TAMS Group will recognise your service with MIPEC.
We will refer your advisors to s. 122 of the Fair Work Act which relates to the transfer of employment situations that affect the obligation to pay redundancy pay.
An employee is not entitled to redundancy pay if an employee rejects an offer of employment made by another employer on terms and conditions substantially similar to and considered on an overall basis, no less favourable than the employee’s terms and conditions with the first employer immediately before the termination and recognises the employee’s service with the first employer.
If you reject TAMS Group’s offer of employment I confirm that you are not entitled to statutory redundancy entitlements.”
[33] The letter concluded with a request that Mr Gravenall advise whether he rejected the offer within 48 hours and indicated that TAMS would like Mr Gravenall to commence work in the week commencing 28 March 2019. The letter is signed by Ms Beeson as HR Consultant for TAMS Group and on behalf of the Managing Director of TAMS Group.
[34] On 25 March 2019 Ms Beeson again corresponded with Mr Gravenall (on TAMS letterhead) stating that TAMS/MIPEC wish to make a formal offer of employment to Mr Gravenall and stating that while his title might change his salary, terms and conditions and other benefits would remain the same. A number of terms and conditions from Mr Gravenall’s previous employment contract were also confirmed. Mr Gravenall was requested to attend a meeting with Mr Bartlett, TAMS’ CFO and “owner of the Human Resource Function.” Ms Beeson signed that letter in the capacity of HR Consultant TAMS/MIPEC.
[35] On 26 March 2019, Mr Heffernan of Industrial Relations Claims on behalf of Mr Gravenall corresponded with Ms Beeson by email. In that email it is disputed that an offer to employ or redeploy Mr Gravenall that can be assessed as suitable alternative employment has been made. It is also stated that whether Mr Gravenall is a transferring employee or has already transferred is for another time. The email goes on to assert that:
“5. Whether our client is a transferring employee or has already transferred is for another time.
6. However, for the purpose of this correspondence only, even if our client accepts s.122 of the FWA has relevance, this section requires our client to assess the offered role as being “on terms and conditions substantially similar to, and, considered on an overall basis, no less favourable than, the employee’s terms and conditions of the employment with the first employer immediately after termination.
7. Our client has repeatedly made it clear that he does not view the so called “offered” role as being no less favourable.
8. It is incumbent on your client to clearly articulate the redeployment or alternative employment.
9. In any event s.120 of the FWA compels the employer to make an application to the FWC, so your client’s position “If you reject TAMS Group’s offer of employment I confirm that you are not entitled to statutory redundancy entitlements” is misconceived, as that is a matter for the FWC to determine, not your client and only after your client makes the application.
10. Given your own correspondence clearly demonstrates that there is no clarity on the role, the location, the remuneration or the fringe benefits (or tool of trade), with that respect, any Application to be relieved from paying a statutory redundancy is doomed to fail.
11. Then of course the question of continuity of employment remains live.
12. We await a formal offer of our client to be redeployed as he cannot reject or accept an offer that is so vague and imprecise as to be meaningless.”
[36] On 26 March 2019 Ms Beeson responded to Mr Heffernan disputing matters set out in his email and maintaining that a formal offer of suitable alternative employment had been made to Mr Gravenall and that in the interests of good faith and to remove any perceived vagueness or ambiguity TAMS would again present its formal offer and give Mr Gravenall a further period until Friday 22 March to accept it and make arrangements to report to work on 1 April 2019. Clearly this is an error and the intention was to give Mr Gravenall until Friday 29 March to accept the offer. The email again requested that Mr Gravenall attend a meeting with Mr Bartlett on 1 April 2019 and concluded as follows:
“If your client has not accepted the offer by Friday your client is further advised that TAMS will make arrangements with him to collect his motor vehicle and no further discussions regarding this offer will be held.
We respect your client’s view that he has not been offered employment that is no less favourable however TAMS do not share your client’s view and as such this clearly will be a matter for the Fair Work Commission to determine and decide notwithstanding the above, we will today commence the application with the Fair Work Commission.”
[37] Documents said to be a formal offer of employment were sent to Mr Gravenall by Ms Beeson on 29 March 2019 and he was requested to advise a time on 1 April when he would be available to meet with Mr Bartlett. On Monday 1 April Ms Beeson again emailed Mr Gravenall stating that he had not responded to the formal offer of employment or the request to meet with Mr Bartlett. The email pointed out some errors in the employment contract in that it referred to Western Australia with respect to long service leave and restraint and advised that these would be corrected. The email concluded by asking Mr Gravenall to advise of his decision in relation to the contract of employment and advising that if the offer was not accepted Mr Bartlett wished to make arrangements to collect Mr Gravenall’s company vehicle while he was in Brisbane.
[38] Mr Gravenall responded with an email in the following terms:
“Jodie/Lee
Jodie: You have answered your query in your email of 26/03/2019
‘If your client has not accepted the offer by Friday your client is further advised that TAMS will make arrangements with him to collect his motor vehicle and no further discussions regarding the offer will be held’
Please note: No agreement to meet Lee at 1 PM today was ever made.
I accept TAMS/MIPEC have made me redundant.
Lee: The vehicle is on the road and can be collected prior to 5PM as I have an appointment scheduled. I will need you to sign for it to prove to both parties it has been collected and any future traffic infringements that are issued.
Thank you
Simon”
[39] Mr Bartlett then emailed Mr Gravenall requesting confirmation of the address from which the car could be collected and stating that he was sorry that Mr Gravenall did not want to accept the position being offered to him with the TAMS Group. Mr Gravenall asserts, and it is not disputed by TAMS, that he was paid accrued leave entitlements but was not paid notice on termination of his employment or redundancy payments.
[40] On 4 April 2019, TAMS applied under s. 120 of the Act to vary redundancy pay to which it was said that Mr Gravenall was entitled under s. 119 of the Act, on the basis that TAMS asserted that Mr Gravenall had been offered a role with terms and conditions that are identical to and no less favourable than the terms and conditions he enjoyed when employed by MIPEC. 4 The application was not made on behalf of MIPEC and MIPEC was not represented in the proceedings. Somewhat confusingly, the s. 120 application filed by TAMS and its submissions in support of that application make extensive reference to the provisions in s. 122 of the Act. That application was allocated to another member of the Commission who issued Directions for the filing and service of material, with TAMS being required to file and serve material in support of the application by 2 May 2019 and Mr Gravenall’s material in opposition being required to be filed and served by 9 May 2019. The parties were also directed to prepare and file an agreed statement of facts by 16 May 2019.
[41] The Associate to the Member of the Commission who was dealing with the s.120 application corresponded with Ms Beeson and Mr Gravenall on 20 May 2019 indicating the views of the Member that the application had been made under s. 120 of the Act and it was unclear how it could now be treated as an application under s. 122 of the Act. The correspondence also pointed out that it was unclear how s. 122 of the Act might give standing to an employer to make an application. The correspondence concluded by requesting that TAMS confirm whether it wished to proceed with the s. 120 application.
[42] On 22 May 2019 Ms Beeson responded advising that TAMS had taken legal advice and held the view that s. 120 was not relevant and that its legal advisor agreed that TAMS did not have standing to make an application under s. 122 of the Act and that only Mr Gravenall had standing to make such an application. TAMS also asserted that “it is strongly arguable” that s. 122(3) applies and TAMS could rely on that section in not paying a redundancy payment. The correspondence confirmed that TAMS wished to withdraw the s. 120 application and attached a notice of discontinuance. When Mr Gravenall’s case was taken up by the Fair Work Ombudsman, TAMS reiterated that its advice from a workplace relations solicitor is that s. 120 of the Act was not relevant and that s. 122 applied.
[43] Faced with the position adopted by TAMS, Mr Gravenall made an application under s. 122(4) of the Act. In correspondence to the Commission in relation to the s. 122(4) application, Mr Gravenall stated that redundancy pay is overdue and that the conduct of TAMS is vexatious. I assume from Mr Gravenall’s correspondence to the Commission in relation to that s. 122(4) application that Mr Gravenall made it reluctantly and on the basis that it appeared that this was the only way to move the matter forward.
[44] The matter was allocated to me and the matter was listed for hearing. Directions were made requiring that the parties file and serve material they relied on. The focus of the parties in their submissions was on comparing the position Mr Gravenall held with MIPEC and the position he was offered by TAMS. In its submissions TAMS also went to great lengths to paint Mr Gravenall’s refusal to meet with Ms Beeson or Mr Bartlett to discuss the alternative position with TAMS as unreasonable and his conduct as being designed to obtain redundancy payments instead of accepting the alternative position.
[45] It is not disputed by TAMS that Mr Gravenall’s position as Manager – Marine was redundant and that his employment was terminated. On the present state of the evidence I am unable to make a finding about which entity employed Mr Gravenall at the point his employment was terminated, and accordingly I cannot determine the s. 122 application. Further my provisional view is that it is misconceived because of the manner in which TAMS dealt with Mr Gravenall.
CONSIDERATION
[46] An employee is entitled to redundancy payments under s. 119 when the employee’s employment is terminated because the employer no longer requires the job to be done by anyone and this is not due to the ordinary and customary turnover of labour. In the present case it is necessary to state the obvious: any obligation to pay redundancy pay under s. 119 is an obligation that is placed on the employer of the person whose employment is terminated on the grounds set out in that section. The obligation arises at the time of the termination of the employee’s employment.
[47] Section 120 of the Act provides a mechanism for an employer to make an application to the Commission for a reduction in the amount of redundancy pay that an employee is entitled to under s. 119 on the basis that the employer has obtained other acceptable employment for the employee or cannot pay the amount. At the risk of stating the obvious, only an employer which has terminated the employment of an employee in circumstances where the employee is entitled to redundancy pay under s. 119 of the Act can make an application under s. 120 of the Act.
[48] If an employer obtains other alternative employment for the employee, the employer cannot unilaterally decide that the alternative employment is acceptable and refuse to pay an amount of redundancy pay to which the employee is entitled by virtue s. 119. Rather the employer in such circumstances must make an application to the Commission under s. 120(2) and succeed in establishing to the satisfaction of the Commission that the alternative employment is acceptable and obtain an order for the payment of a specified amount (which may be nil).
[49] Section 120 of the Act does not provide a mechanism for an employee whose employment is terminated due to redundancy to make an application seeking payment of redundancy pay if the employer asserts that it has found alternative employment for the employee and refuses to pay redundancy payments to the employee. The remedy for the employee in those circumstances is to make an application to a Court seeking payment of the amount of redundancy pay to which the employee asserts an entitlement under s. 119 of the Act because the employer has not sought and been granted an order under s. 120(2).
[50] If Mr Gravenall was employed at all times by MIPEC, then he was dismissed by MIPEC on 1 April 2019. On the basis that the reason for the termination of Mr Gravenall’s employment was that his position was redundant, he was entitled to be paid redundancy payments by MIPEC at that point. If MIPEC asserted that it was not required to pay redundancy payments to Mr Gravenall because it obtained acceptable alternative employment for Mr Gravenall, MIPEC should have made an application under s. 120 of the Act seeking that the redundancy pay to which Mr Gravenall was entitled, be reduced to nil.
[51] It was TAMS and not MIPEC which made the s. 120 application. Other than a reference to MIPEC in the facts set out in the s. 120 application there is no evidence that Ms Beeson was acting on behalf of MIPEC in that matter. If MIPEC was Mr Gravenall’s employer at the point his employment was terminated, then TAMS could not have made an application under s. 120 of the Act. Arguably TAMS did not make the wrong application. Rather the right application was made by the wrong entity.
[52] TAMS reliance on s. 122 is also misconceived. Section 122(2) provides that an employee is not entitled to redundancy pay in a transfer of employment situation if s. 22(5) applies. Section 22(5) deals with circumstances where service with one employer counts as service with another employer in a transfer of employment situation. Section 22(5) does not apply to transfer of employment between non-associated entities for the purposes of redundancy pay where the second employer decides not to recognise the employee’s service with the first employer.
[53] Accordingly, for s. 122(2) to have applied to disentitle Mr Gravenall to redundancy pay under s. 119, it would be necessary that there was a transfer of employment between MIPEC and TAMS in circumstances where TAMS decided that it would recognise Mr Gravenall’s service with MIPEC so that s. 22(5) applied. There is no evidence that Mr Gravenall accepted employment with TAMS or performed any work for TAMS so that his employment transferred from MIPEC to TAMS. It is also the case that TAMS asserted in correspondence to Mr Gravenall on 12 March 2019 that it has made clear in earlier correspondence that it would recognise his service with MIPEC. I note other than the email of 12 March 2019, no correspondence making such a statement appears to have been tendered to the Commission.
[54] Section 122(3) operates so that an employee is not entitled to be paid redundancy pay by the first employer when the employee rejects a position with the second employer which meets the criteria in s. 122(3)(a) in relation to similar or no less favourable terms than the position with the first employer and if the employee had accepted the position there would have been a transfer of employment.
[55] Section 122(4) applies when the position offered by the second employer meets the criteria in s. 122(3) but the employee asserts that notwithstanding this s. 122(3) operates unfairly. Where the employee does not accept that the position offered by the second employer provides similar or no less favourable terms, the remedy is for the employee to make an application to a Court seeking redundancy pay, rather than an application under s. 122(4).
[56] In the present case, both s. 120 and s. 122(3) only operate with respect to the obligation of the employer which terminated Mr Gravenall’s employment, to pay redundancy pay under s. 119. Section 122(2) only operates if there was a transfer of Mr Gravenall’s employment between MIPEC and TAMS. These are matters which seem to have been entirely overlooked by TAMS and its advisors. It is also the case that any order that Mr Gravenall may obtain under s. 122(4) can only be that MIPEC pays him redundancy pay.
[57] Accordingly, even if Mr Gravenall succeeds with the application under s. 122(4) of the Act, it can only result in MIPEC being ordered to pay redundancy pay to Mr Gravenall and not TAMS. Notwithstanding this, TAMS has responded to Mr Gravenall’s application under s. 122(4) of the Act and conducted itself on the basis that an order which might be made under s. 122(4) would be made against TAMS. TAMS was named as the Respondent in the s. 122(4) application and Directions were issued on that basis. Ms Beeson represented TAMS in the hearing and did not take issue with TAMS being the Respondent to the s. 122(4) application.
[58] As previously stated, the approach adopted by TAMS is misconceived. It has resulted in a situation where Mr Gravenall has not been paid redundancy payments to which he was entitled on 1 April 2019 when his employment was terminated. There is no determination under s. 120 reducing those payments. If TAMS asserts that Mr Gravenall is not entitled to redundancy pay because of s. 122(3) of the Act, than the basis upon which TAMS makes that assertion is not clear, given that MIPEC and not TAMS employed Mr Gravenall.
[59] Mr Gravenall has also been placed in a position where he was arguably compelled, because of the conduct of TAMS, to make an application that was not relevant to his situation and could not achieve the outcome sought – that TAMS pay him redundancy pay under s. 119 of the Act. It is also doubtful that Mr Gravenall understood the implications of making an application under s. 122(4) of the Act.
[60] There is no evidence that Mr Gravenall ever accepted employment with TAMS so that his employment transferred regardless of whether TAMS and MIPEC are associated entities or there was a transfer of business between them. It is also not clear which entity employed Mr Gravenall at the point his employment was terminated.
[61] As previously stated there is insufficient evidence to establish that Mr Gravenall was ever employed by TAMS and I am unable to make a concluded finding in relation to these three scenarios. Depending on which scenario applies different outcomes follow.
CONCLUSION
[62] I require further submissions and, if necessary, evidence in relation to the following matters:
• At the point Mr Gravenall’s employment was terminated which entity employed him - TAMS or MIPEC?
• If there was a transfer of Mr Gravenall’s employment from MIPEC to TAMS when did it occur and on what basis?
[63] I direct TAMS to respond to the matters raised in this Decision by 4.00 pm Thursday 26 March 2020. Mr Gravenall should provide any submission or statement of evidence in relation to the matters I have raised or in response to the submissions of TAMS, by 4.00 pm on Wednesday 2 April 2020.
[64] In responding to the matters I have raised in this Decision, TAMS should note that an order under s. 120 or s. 122 is discretionary. At this stage, if TAMS or MIPEC decides to make an application under s. 120 of the Act for redundancy payments to which Mr Gravenall is entitled to be reduced, then the delay caused to Mr Gravenall by TAMS’ misconceptions about the provisions of the Act to the present time, may weigh against the exercise of the discretion. In short TAMS’ conduct in relation to Mr Gravenall has caused a significant delay to the resolution of his dispute about his redundancy entitlements. Such a delay should not have occurred in circumstances where MIPEC and TAMS had access to advice from a Human Resources Consultant and a legal advisor.
[65] Further, if the s. 122 application is pressed by Mr Gravenall, then the conduct of TAMS and the resulting delay to the resolution of Mr Gravenall’s claim for redundancy payments may also be relevant to whether there has been unfairness of the kind referred to in s. 122(4) sufficient for an order for redundancy payments to be paid to Mr Gravenall to be made. It should be noted that consideration of unfairness for the purposes of s. 122(4) is not limited to consideration of the position offered to the employee and its similarity to the position the employee held with the first employer.
[66] This matter will be listed for a further telephone hearing on Friday 3 April 2020 at sittings commencing at 12.00 pm AEST to deal with the issues raised in this Decision.
DEPUTY PRESIDENT
Appearances:
Mr S Gravenall on his own behalf.
Ms J Beeson of Beeson HR Consulting on behalf of the Respondent.
Hearing details:
9 September.
2019.
Brisbane.
Printed by authority of the Commonwealth Government Printer
<PR717551>
1 Exhibit 3, [1], Exbit 2,pg 2.
2 Exhibit 1
3 Exhibit A2 Attachment 2.
4 C2019/2215.
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