Nowra Family Support Service Inc v Janette Airey-Grahm
[2011] FWA 4823
•25 JULY 2011
[2011] FWA 4823 |
|
DECISION |
Fair Work Act 2009
s.120—Redundancy pay
Nowra Family Support Service Inc
v
Janette Airey-Grahm
(C2011/3856)
COMMISSIONER CONNOR | WOLLONGONG, 25 JULY 2011 |
Application by employer to vary redundancy pay–incapacity to pay–small business exemption–alternative employment available
The Issue in Dispute
[1] The Nowra Family Support Service Inc is an organisation providing programmes for vulnerable families with young children in the Shoalhaven region—an area which extends to 49 towns and villages on the south coast of New South Wales with a high percentage of the population on low income and pensions. It operates not for profit and its funding is derived from grants from the New South Wales Human Resources Community Services and the Brotherhood of St Laurence and from its own fund-raising activities. It provides a wide range of activities—a home visiting service to disadvantaged families with young children, centre-based activities for parenting groups, play groups, vocational courses, a drug and alcohol in pregnancy and parenting service and a home interaction program for parents and youngsters.
[2] From late 2010 the NFSS also acted in partnership with a range of services in the region—the Waminda South Coast Aboriginal Women’s Health Corporation, Shoalhaven Women’s Health and the Illawarra Multicultural Service. Ms Janette Airey-Graham was employed by the NFSS on Wednesday, 20 October, 2010 as a project worker (staying at home leaving violence) on a flexible arrangement working from 28 hours per week to 40 hours per week as part of the partnership arrangement with Waminda. Ms Airey-Graham had previously worked for the NFSS for 12 years and her entitlements for that period were simply transferred over to the new position. But when the partnership with Waminda was dissolved on Thursday, 24 February, 2011, Ms Airey-Graham’s position became redundant.
[3] On Monday, 28 February, 2011 the NFSS offered Ms Airey-Graham an alternative position of family case worker/group co-ordinator but that was at a lower salary level and she rejected it. Instead, Waminda offered her a position, essentially performing the same work as she had previously been involved in under the disbanded partnership and on an identical salary.
[4] On Wednesday, 23 March, 2011 the NFSS e-mailed to Ms Airey-Graham asking her whether she wanted all her entitlements under the partnership transferred over to her new position with Waminda. She subsequently declined that offer and requested that her entitlements to long service leave and annual leave be paid out. (Her sick leave entitlements were not, of course, paid out in that way, however: sick leave is provided for the purpose of protecting employees against the hardship associated with lack of earnings during periods of illness and an employee who is not sick is not therefore entitled to sick leave—the Queensland Sick Pay Case (1972) AILR Rep.414.)
[5] Pursuant to s.119(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.”
[6] A graduated scale of severance payments in prescribed in s.119(2) which in the case of Ms Airey-Graham, with over ten years of employment with the NFSS, would mean 12 weeks of severance payments. However, in terms of s.120:
“(1) This section applies if:
(a) an employee is entitled to be paid an amount of redundancy pay by the employer because of s.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, FWA may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that FWA considers appropriate.
(3) The amount of redundancy pay to which the employee is entitled under s.119 is the reduced amount specified in the determination.”
[7] And s.121(1)(b) provides further that the redundancy pay in s.119 does not apply if, immediately before the time of the termination, or at the time when the person was given notice of the termination (whichever happens first), the employer was a small business employer, ie one which employs fewer than 15 employees [s.23].
[8] The NFSS has lodged an application under s.120 and I set the matter down for a conference in accordance with s.398 in relation to the matter on Friday, 15 April, 2011 and Wednesday, 18 May, 2011. Ultimately, I set the matter down for a hearing on Tuesday, 28 June, 2011. In the hearing Ms Arnold represented the NFSS and Ms Grieve represented Ms Airey-Graham and the Australian Services Union of which Ms Airey-Graham is a member. Ms Airey-Graham gave evidence in the hearing and was subject to cross-examination by Ms Arnold. All proceedings were conducted in the premises at 90 Crown Street, Wollongong which Fair Work Australia now shares with the New South Wales Industrial Relations Commission.
[9] There are certain jurisdictional limitations on the payment of redundancy pay which the NFSS has raised in defence of its position. Firstly, it argues that it offered acceptable employment to Ms Airey-Graham which she declined [s.120(1)(b)(i)]; secondly, it claims incapacity to pay on financial grounds [s.120(1)(b)(ii)]; thirdly, it asserts that as a small employer it is exempt from the requirements of s.119 in any event [s.121(1)(b)].
Is the NFSS a Small Business Employer?
[10] Firstly, the question is whether or not the NFSS is exempt from the obligation to pay redundancy pay to Ms Airey-Graham as a small business employer. This question is basically a mathematical calculation. Put simply, in view of the terms of s.121(1)(b), how many employees of the NFSS were engaged at the time of the termination of Ms Airey-Graham’s services or the time she was given notice of that termination of her services (whichever came first)? If there were fewer than 15 employees at the time that Ms Airey-Graham’s services were terminated, or when she was given notice of her impending retrenchment, then the organisation would be exempt from the obligation to pay any redundancy payments.
[11] At the time Ms Airey-Graham’s services were terminated, the NFSS claimed that it had 14 full-time or part-time employees––co-ordinators, child care workers, caseworkers, a clerical assistant, a bookkeeper and a receptionist—plus a number of other casual workers which it engaged from time to time, as required, and a home tutor and a family case worker who were subsequently employed two months later by the NFSS (but which were not employed on Monday, 28 March, 2011 when Ms Airey-Graham’s services were terminated). I would be prepared to factor in casual employees who were systematically engaged by the organisation but Ms Arnold claims that were not the case and Ms Airey-Graham is not able to rebut that claim in her evidence.
[12] In fact, however, Ms Airey-Graham indicated in her evidence that she was earlier given notice––four weeks earlier, it would appear from her evidence—that her employment was “...in jeopardy...”. At that time there was one further family case worker engaged, who resigned on Wednesday, 9 March, 2011. An indication that employment was “...in jeopardy...” is not, to my mind, necessarily the same thing as notice of impending retrenchment and, according to Ms Arnold, actual notice of Ms Airey-Graham’s retrenchment was given contemporaneously with the resignation of the case worker on Wednesday, 9 March, 2011, ie when there was less than 15 employees engaged by the NFSS. It would seem to me that it is open to me to conclude from the evidence before me in this hearing that the NFSS is actually exempt—marginally—from its obligation to pay redundancy pay to Ms Airey-Graham by virtue of s.121(1)(b).
Is the NFSS Operations Exempt Due to Financial Difficulties?
[13] Secondly, there is the question of the NFSS’s financial position. The auditors for the organisation have provided information by e-mail concerning its financial status (and other matters):
“...We confirm we have been acting as your auditor since 2001 and have been a party of the many changes due to changes in government, changes in funding, changes in the workers’ awards, to mention but a few. Regarding the issue of paying out any redundancy payments, we are of the view that Nowra Family Support Services Inc, as a not for profit organisation, has not been funded to make any redundancy payments and the forced payment thereof will make the ongoing funding of other required expenses difficult. The reason is that the funding bodies providing core and stipulated funding and do not include any provisions to include redundancy payments and, in most cases, funding is to be specifically targeted at one-off and on-going projects.
It is also our understanding that to the letter of the law, Nowra Family Support Services Inc had less than 15 employees on the day that the former employee was made ‘redundant’ and really it was not a ‘redundancy’ in the normal sense, as the employee continued doing the same work from the same premises but for another associated employer. Under the circumstances, for the employee to claim redundancy seems very unreasonable, even if by the definition of ‘redundancy’ it is possible that she may come under that definition.
Emphatically, it is our understanding that all reasonable measures were taken and that the employee is not financially disadvantaged and in reality is in the same (job) employment with the former partner in the same job role, etc. As the auditors for Nowra Family Support Services Inc, we support your position to apply to vary the redundancy payment to nil based on the organisation’s incapacity to reasonably make any such payments. We are more than happy to provide additional information, if required...”
[14] The information actually provided to me in this hearing concerning the financial status of the NFSS, confined as it is to the e-mail from the auditor, is not to my mind really sufficient to reach a clear conclusion concerning whether or not it would be appropriate to exempt the NFSS under s.120(1)(ii) from an obligation to pay Ms Airey-Graham redundancy pay. I accept that organisations such as the NFSS operate on very limited budgets, dictated by the funding they actually receive, and, regrettably, it is not uncommon for funding provided to such organisations to not include any provision for redundancy pay to its retrenched staff. However, I accept that, as Ms Grieve has submitted in the hearing, the fact that the NFSS is a not-for-profit organisation does not exempt it from the obligation to pay redundancy pay to its retrenched staff in accordance with s.119.
Did the NFSS Arrange for Acceptable Alternative Employment?
[15] Thirdly, there is the question of the alternative employment which the NFSS offered Ms Airey-Graham. The NFSS did make efforts to find employment for Ms Airey-Graham, albeit it was not at her previous grade and salary level and she rejected it.
[16] The question of what is “acceptable” alternative employment for the purposes of s.120(1)(b)(i) would depend upon the circumstances of each individual case. It is trite to say that an employee who is offered another position, and accepts it, has found that new job “acceptable”. It would not necessarily follow that the alternative employment should be identical to the former employment. However, I believe that the offer of employment on less than a retrenched employee’s previous grading and salary would not prima facie be regarded as “acceptable” employment for the purposes of s.120(1)(b)(i), albeit no doubt it was all that the NFSS had available.
[17] Nor does it appear that the NFSS actually took the steps required of it to obtain other acceptable employment in Waminda in terms of s.120(1)(b)(i). Ms Grieve referred in that respect in her submissions to the decision of Marshall J of the Federal Court of Australia in Allman v. Teletech International Pty Limited (2008) 178 IR 415. His Honour considered the expression “...able to arrange alternative employment” in an Australian Workplace Agreement (AWA) and, recognising that the former employer actively assisted and encouraged its retrenched staff to find alternative work, nevertheless held that the former employer was not exempt from the obligation to pay redundancy pay. Whether the employees actually took up the offer of alternative employment or not was an irrelevant consideration.
[18] Marshall J had this to say in Allman v. Teletech International Pty Limited (at paras 14 and 15):
“...In the relevant AWA’s of the employee applicants, the applicable sub-clause refers to the employer being ‘...able to arrange alternative employment...’. There is no material difference between obtaining alternative employment and being able to arrange it. If an employer who is about to make an employee redundant said to the employees ‘I have obtained alternative employment for you’ or said ‘I have been able to arrange alternative employment for you’, the employee would understand the employer on each occasion to be saying that it has found another job for the employee. The employee may not choose to take up the job, but it must be one that is there for the taking if the employee chooses to take it.
Teletech assisted its soon to be redundant employees to apply for jobs with Telstra. Teletech had active involvement in the transition of the employee applicants from work with Teletech to work for Telstra. Immediately after Telstra advised Teletech that it would not renew its contract with Teletech for the provision of services..., representatives of each company met to discuss the possible employment of the call centre employees by Telstra. Teletech secured a commitment from Telstra that Telstra would give all Teletech’s employees at the...call centre the opportunity to apply for employment with Telstra and be available to be recruited by Telstra. Teletech was not, however, a strong moving force towards the creation of the available opportunity. The available opportunity arose because Telstra was to perform functions formerly performed for it by Teletech. Telstra required staff. It made sense for it to approach Teletech staff. As counsel for the applicants submitted, Teletech arranged an opportunity for the employee applicants to participate in a recruitment process undertaken by Telstra...”
[19] In this case, a similar situation has arisen, in my opinion. No doubt there were, as Ms Arnold suggested in her submissions, there were discussions between the NFSS and Waminda concerning the continuation of the activities carried out by Ms Airey-Graham but there really is no evidence of a role by the NFSS in finding Ms Airey-Graham the job with Waminda. Ms Grieve submitted that Ms Airey-Graham secured her current employment through her own efforts. According to the evidence of Ms Airey-Graham, however, that is not, in fact, strictly true. She did not approach Waminda for employment at all: it approached her, offering her the job which was essentially the job she had formerly occupied, on the same salary, and which she accepted.
[20] Nevertheless, the NFSS role in that new position appears to me to have been peripheral and certainly not sufficient to support any argument that it obtained alternative, acceptable employment within the meaning of s.120(1)(b)(i).
Conclusion
[21] But there is, in my opinion, an even more fundamental reason why Ms Airey-Graham’s claim to redundancy pay must fail. Has she actually been retrenched at all? I do not believe so. The fact is that at the time of her retrenchment she was employed by a partnership involving jointly the NFSS and Waminda. That partnership may have ceased to exist but, as I understand the position, Ms Airey-Graham is still performing the work she was originally engaged to perform by Waminda. For all practical purposes, her former emplopyment with the NFSS/Waminda partnership is the same as her current employment with Waminda alone. She was paid out her long service leave and annual leave entitlements— but at her own request. Whilst Ms Grieve indicated in her submissions that Ms Airey-Graham has lost sick leave entitlements, as I indicated earlier in this decision, she would not be entitled to those entitlements at all unless she was sick in the first place. Sick leave entitlements are not necessarily matters which I regards as transferable.
[22] For that reason, I conclude that Ms Airey-Graham has no entitlement to redundancy pay. I issue a separate order to that effect.
COMMISSIONER
Appearances:
Pam Arnold for Nowra Family Support Service Inc
Rhianne Grieve for the respondent and the Australian Services Union
2011
Wollongong
28 June, 2011
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