On The Move Caravans Pty Ltd
[2023] FWC 2110
•23 AUGUST 2023
| [2023] FWC 2110 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.120—Redundancy pay
On The Move Caravans Pty Ltd
(C2023/4758)
| DEPUTY PRESIDENT CLANCY | MELBOURNE, 23 AUGUST 2023 |
Application for variation of redundancy pay –satisfied the applicant obtained other acceptable employment for the employee – application granted.
On 11 August 2023, On The Move Caravans Pty Ltd (OTM) applied for an order under s.120 of the Fair Work Act 2009 (the Act) to reduce the redundancy entitlement of Ms Tania Kearton. The application is made on the basis that OTM obtained other acceptable employment for Ms Kearton, which she accepted.
Ms Kearton worked at OTM from 8 October 2020 to 31 July 2023 and at the time she was given notice of her termination, OTM had 15 employees. As such, s.121 of the Act does not apply and Ms Kearton is therefore entitled under s.119 to six weeks’ redundancy pay. OTM has applied to reduce that amount to zero. Ms Kearton does not oppose the application.
Background
OTM is a wholesaler of caravans. Having commenced employment with OTM on 8 October 2020, Ms Kearton was engaged in a ‘QC role’ immediately prior to her employment with OTM ceasing. This involved quality control tasks such as cleaning for which she was engaged at an hourly rate of $28 for a 40 per week. OTM has a retail arm called Caravan HQ and this entity is supplied by both OTM and other wholesale suppliers. One of the other wholesale suppliers supplying Caravan HQ is Royal Flair Caravans.
On or about 21 July 2023, Ms Kearton was informed by the OTM Operations Manager, Luke Hallet that her employment was to terminate due to redundancy with effect on 31 July 2023. Mr Hallet also advised Ms Kearton that he had set up an interview for her with Royal Flair Caravans. The interview opportunity arose from a discussion initiated by a director of both Caravan HQ and OTM, Mr Kevin Pole. Mr Pole had contacted Royal Flair Caravans, advised them that OTM was closing and stated that OTM had an exceptional employee, such that if Royal Caravans were seeking an employee, OTM would recommend her.
Ms Kearton said she attended the interview with Royal Flair Caravans, the outcome of which was that she was advised there was a job with them if she wanted it and she was invited to advise them as to when she could start. Ms Kearton agreed to take the job and a commencement date of Monday 31 July 2023 was arranged.
Legislation
Section 119 of the Act provides a statutory right to redundancy pay in amounts calculated based on an employee’s continuous service with the employer.
Section 120 of the Act provides as follows:
“(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
In applications such as these, the onus lies on the employer company seeking the exemption from redundancy payment obligations and the discretion exists for the Commission to make an order to reduce or remove an employee’s statutory entitlement to redundancy pay.
The Full Bench of the Commission in Australian Commercial Catering Pty Ltd v Powell and Togia; Powell v Australian Commercial Catering Pty Ltd[1] outlines the approach that I intend to follow in considering OTM’s application to reduce Ms Kearton’s redundancy pay:
“[35] In considering an application made by an employer under s.120, the Commission must first consider whether either of the circumstances set out in paragraphs (a) or (b) of s.120(1) applies. Consideration under s.120 is enlivened upon an application being made by the employer for a reduction in the amount of redundancy pay otherwise payable under s.119. In dealing with such an application, the Commission must first determine whether the pre-conditions for the application of the section set out in s.120(1) are satisfied - that is, that the employee the subject of the application has an entitlement under s.119 to redundancy pay, and that the employer has either obtained other acceptable employment for the employee or cannot pay the redundancy entitlement.
[36] As was pointed out in the Full Court decision, “The origin of s 120 lies in the decision of the Full Bench of the Conciliation and Arbitration Commission in Termination, Change and Redundancy Case (1984) 8 IR 34 to introduce an entitlement to severance pay for all employees under federal awards whose employment had been terminated because of redundancy”.[2] Cases decided in relation to award provisions established pursuant to those test case provisions are therefore relevant in the consideration of s.120.
[37] In relation to s.120(1)(b)(i), whether alternative employment obtained by the employer is “acceptable” is to be determined objectively, not by reference to whether the employment is subjectively acceptable to the employee.[3] The determination of whether alternative employment is acceptable requires an assessment and value judgment on the part of the decision-maker.[4] The employer “obtains” other acceptable employment when it acquires or gets the employment by its conscious, intended acts.[5]
[38] Once it is concluded that the preconditions in s.120(1) are satisfied so that s.120 is applicable, it will be necessary for the Commission to determine under s.120(2) whether the employee’s entitlement to redundancy pay under s.119 should be reduced and, if so, by how much. This requires the exercise of a broad discretionary power.[6] Any determination by the Commission for a reduced amount of redundancy pay then becomes the employee’s entitlement under s.119: s.120(3).”
Section 119(1)(a) of the Act
There is no dispute that Ms Kearton’s position with OTM is redundant and therefore, she would ordinarily be entitled to redundancy pay pursuant to s.119(1) of the Act. Her employment was terminated by OTM because it no longer required the QC role performed by Ms Kearton to be done by anyone.
Section 120(1)(b)(i) of the Act
As to whether OTM obtained other acceptable employment for Ms Kearton, I am satisfied OTM acquired or “got” the employment for Ms Kearton with Royal Flair Caravans by its conscious, intended acts. OTM made an unsolicited representation to Royal Flair Caravans regarding Ms Kearton in which it provided a positive recommendation regarding her, established that Royal Flair Caravans wanted to interview her and then set up the interview.
As I am satisfied OTM had obtained other employment for Ms Kearton, I must also be satisfied it constitutes “other acceptable employment”. Whether alternative employment is “acceptable”, is to be determined objectively. In Clothing & Allied Trades Union of Australia v Hot Tuna Pty Ltd, the Full Bench of the Australian Conciliation and Arbitration Commission stated:
“…the test of acceptability of the alternative employment is an objective one involving a consideration of such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and other matters.”[7]
Having regard to the information I received from Ms Kearton, I consider Ms Kearton’s new employment with Royal Flair Caravans is acceptable in the sense required by s.120(1)(b)(i) of the Act. Ms Kearton’s total weekly hours with OTM were matched by Royal Flair Caravans, as was her hourly rate of pay. Both businesses are located in Epping which meant her travel time to and from Craigieburn was comparable. The duties were also comparable.
While Ms Kearton started with Royal Flair Caravans and only worked two days there before resigning, I have noted this was because she decided to take another position with a rate of pay that was superior to those on offer at both Royal Flair Caravans and OTM.
I consider that it is fair and reasonable in the present circumstances to reduce the redundancy entitlement of Ms Kearton to nil. Other acceptable alternative employment with Royal Flair Caravans was obtained for Mrs Kearton by OTM and I do not consider there to be any significant countervailing considerations that weigh against the exercise of my discretion.
Conclusion
I am satisfied that OTM obtained other acceptable employment for Ms Kearton, and that in all the circumstances I should exercise my discretion to reduce her redundancy pay to nil. An order will be issued separately reflecting this decision.
DEPUTY PRESIDENT
Appearances:
Ms J Pole for On The Move Caravans Pty Ltd.
Ms T Kearton on her own behalf.
Hearing details:
2023.
Melbourne (via Telephone):
August 22.
[1] [2016] FWCFB 5467.
[2] [2015] FCAFC 189 at [12].
[3] Clothing & Allied Trades Union of Australia v Hot Tuna Pty Ltd (1988) 27 IR 226; Clothing Trades Award 1982(1) [1990] AIRC 980; (1990) 140 IR 123.
[4] [2015] FCAFC 189 at [45].
[5] FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia [2015] FCAFC 90 at [20].
[6] Ibid at [21]; [2015] FCAFC 189 at [42], [60].
[7] (1988) 27 IR 226 (Munro and Peterson JJ, Leary C) at 230-231.
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