P&R Electrical Wholesalers Pty Ltd
[2017] FWC 400
•6 FEBRUARY 2017
| [2017] FWC 400 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.120—Redundancy pay
P&R Electrical Wholesalers Pty Ltd
(C2016/7549)
COMMISSIONER HAMPTON | ADELAIDE, 6 FEBRUARY 2017 |
Variation of redundancy pay – position redundant – whether employer obtained acceptable alternative position – alternative position offered within the company – same role and salary – same or similar formal working conditions – two different locations – not substantial travel involved – difference in informal conditions – some issues about process leading to the redundancy – alternative position objectively acceptable – factors relevant to discretion – some reduction in redundancy pay warranted – order made.
1. Background and case outline
[1] P&R Electrical Wholesalers Pty Ltd (P&R) has made an application to the Commission seeking a reduction in the redundancy pay otherwise due to Ms Lynne Pannell, a full-time Counter Sales Person who was, at the time of the cessation of her employment, located at its Stepney branch in South Australia.
[2] P&R is a South Australian based electrical wholesaler with branches across the Adelaide metropolitan and regional areas.
[3] The application concerns redundancy payments provided by s.119 of the Fair Work Act 2009 (the FW Act) 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 |
[4] The application has been made under s.120 of the FW Act which provides as follows:
“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.”
[5] P&R relies upon s.120(1)(b)(i) of the FW Act on the basis that it contends that it “obtained” (made available) acceptable alternative employment for Ms Pannell at another branch of its operations; namely, the same role of Counter Sales Person at one of three other branches. Those branches being the stores located at Lonsdale, Hahndorf and ultimately, Malvern. Each of these branches is within the greater metropolitan area of Adelaide, although Hanhdorf is in the Adelaide Hills. In particular, P&R relies upon the alternative position at the Malvern Branch as being acceptable alternative employment for present purposes. It formally contends that the redundancy pay should be reduced to zero.
[6] Ms Pannell disputes that the positions at any of the three branches were acceptable alternatives on a number of grounds, including the distance from her home and then existing work location, and the loss of workplace flexibility inherent in her position at the Stepney branch. Ms Pannell has caring responsibilities for children.
[7] Ms Pannell was advised in late November 2016 about the decision to make her position redundant. Later, Ms Pannell was offered positions at the other branches and by early December, the three options were made available to her by P&R. Ms Pannell advised P&R in mid-December 2016 that the alternative positions were unacceptable and that an offer to resolve the matter as part of a deed of release with partial payment of redundancy benefits was also rejected.
[8] On 14 December 2016, Ms Pannell was advised of a vacancy (due to a resignation) at the Malvern branch, which is considerably closer to Ms Pannell’s home than the other two stores. Further, an offer was then made to allow Ms Pannell to work at this branch on a part-time basis (30 hours per week) in order to provide more “flexibility”.
[9] It appears to be common ground that Ms Pannell’s position at the Stepney branch became redundant due to low sales volume. Although Ms Pannell strongly contests whether it was appropriate that she be selected in light of relatively recent staff appointments, I understand that Ms Pannell acknowledges that her position was made redundant.
[10] Ms Pannell’s employment concluded on 20 December 2016. It was agreed between the parties that the issue of the redundancy payments would be resolved through this application. It is also common ground that the redundancy provisions of s.119 of the FW Act establish the entitlements, and that in the case of Ms Pannell, who commenced with P&R on 23 February 2009, this means that 13 weeks redundancy pay is otherwise due given her length of service.
[11] A determinative conference was convened by the Commission on 18 January 2017. During the course of the conference, both parties outlined their respective positions, and directions were issued for the filing of additional written materials. I also note that by agreement, the parties at that time advanced various without prejudice proposals that were ultimately not adopted. Consistent with the understanding reached with the parties at that time, I have not had regard to those proposals in determining this matter.
[12] Given the nature of the application and the absence of significant relevant factual disputes, and with the agreement of the parties, this application has been determined on the basis of written submissions and evidence.
2. The position of P&R Electrical Wholesalers Pty Ltd
[13] During the course of this matter, P&R confirmed that it was relying upon the alternative position(s) at its Malvern branch. On that basis, I have considered the other options as part of the context but concentrated upon the proposed arrangements in relation to that branch.
[14] P&R contends that both the full-time and part-time positions offered at the Malvern branch were acceptable alternative employment. That is, the position involved the same role, and if the full-time role was taken, the same hours and conditions of employment. Further, the offer of the part-time employment provided a further option for Ms Pannell and this was made to accommodate her family responsibilities and apparent desire for flexibility.
[15] P&R also contends that there was no objective basis to reject the proposed Malvern position and, in effect, that any concerns about the process leading to the alternative proposals were not genuine or relevant.
[16] Although P&R initially sought that the redundancy payment be reduced to zero, in final submissions it acknowledged that some redundancy payments were expected to be awarded by the Commission and committed to payment of any entitlements determined by the Commission within one business day of any such decision.
3. The position of Ms Pannell
[17] Ms Pannell has advised P&R and the Commission that she was not able to accept the full-time position at the Malvern branch for the following reasons:
● There was mutual flexibility at the (larger) Stepney branch in terms of working hours, the capacity to attend to caring responsibilities, including the ability to work from home or attend work with her children when required, which would not be possible at the Malvern branch;
● The Malvern branch was not as convenient as the Stepney branch in terms of its location relative to her home and relevant school; and
● The process leading to the redundancy involved her feeling “bullied, betrayed and unbelievably stressed” and this destroyed her confidence in the organisation and led to an unwillingness to continue to work at P&R.
[18] In relation to the part-time position at Malvern, Ms Pannell indicated that the resignation concerned involved a close family friend who was seeking to retract the resignation and return to employment with P&R. Ms Pannell considered that if she took the Malvern role at that time, this would jeopardise those attempts and was unwilling to do that.
[19] I understand Ms Pannell’s position to be that given the above factors, the proposed Malvern position(s) should not be considered to be acceptable alternative employment for present purposes.
[20] As a result, Ms Pannell seeks the full payment of her statutory redundancy entitlements and, in effect, that this application be dismissed.
4. Did P&R obtain acceptable alternative employment for Ms Pannell by offering the position(s) at the Malvern Branch?
[21] In order to determine this question, it is necessary to consider both the appropriate approach to be taken by the Commission to s.120 of the FW Act and the nature of the alternative position in the context of the parties.
[22] The historical context for the nature of the provisions that are now found in s.120 of the FW Act is summarised by the Full Bench of the Australian Industrial Relations Commission in Australian Chamber of Manufacturers and Derole Nominees Pty Ltd - Clothing Trades Award 1982 1 (Derole) in the following terms:
“
“Obtains”
This term originates from the first decision in the Termination, Change and Redundancy Case where the Full Bench said:
“Two particular instances, which the employers argued might warrant an application for relief from the obligation to pay the general prescription, which were brought to our attention in the proceedings were when an employer obtains acceptable alternative employment for the employee, and where employees receive the benefit of superannuation schemes on retrenchment.
We do not wish to prevent an employer making an application to be exempted from the general prescription pursuant to this decision in cases where an employer obtains acceptable alternative employment for an employee but we would point out that, in our decision, severance payments are not made for the purpose of assisting employees to find alternative employment. Where such an application was made it would be important to consider whether previous service with the previous employer was recognized as service with the new employer.”
The word “obtains” does not appear in its context to mean actually obtain in the fullest sense possible. In circumstances like those occurring at the company one employer is incapable in law of effecting a contract of employment between his employee and another employer whether by assignment or otherwise; the creation of the legal relationship of master and servant depends on a mutuality being arrived at between the individual and the incoming employer. Therefore, the pursuit of alternative employment by the outgoing employer cannot be expected, by reason of itself alone, to produce new employment; there will usually and perhaps always remain the opportunity for the incoming employer, and the employee, to disagree as to matters such as terms of employment, suitability of the job to the employee and vice versa so that alternative employment may not eventuate.
It follows that “obtain” must be given some lesser meaning. The Shorter Oxford Dictionary (third edition, revised) provides as its relevant meaning, the definition of “obtain” as “to procure or gain, as the result of purpose and effort”. It seems to us that meaning is of assistance here; that is, the employer by purpose and effort may establish an opportunity which suits the employee and which crystallises as alternative employment of an acceptable kind.
This approach is supported if the passages quoted above from the Termination, Change and Redundancy Case are read in conjunction with what was said under the heading “assistance in seeking alternative employment”. There the Commission records the ACTU objective of achieving award provisions “designed to ensure that the employer assists the employee to find alternative employment”.
Reliance was placed by the ACTU on a decision of the South Australian Industrial Commission in the Milk Processing and Cheese Etc Manufacturing Case:
“where it was decided that there should be included in any detailed prescription on redundancy an obligation on the employer actively to offer, or to make reasonable endeavours to procure, suitable alternative employment for redundant employees.”
Dealing with the circumstances in which the general prescription the Full Bench was awarding might be departed from, the decision in the Termination, Change and Redundancy Case indicates that particular regard was paid to, inter alia, the S.A. Milk Processing and Cheese Etc. Manufacturing decision. Viewed in this way it will be seen that the intention is not to impose an absolute test on the employer’s ability to “obtain” alternative employment but rather it refers to action which causes acceptable alternative employment to become available to the redundant employee. The employer must be a strong, moving force towards the creation of the available opportunity.” 2
[23] I note that one element of the approach taken in Derole must however now be considered subject to the later decision of the Full Federal Court in FBIS International Protective Services (Aust) Pty Ltd v The Maritime Union of Australia. 3 In particular, the Court has qualified that the appropriate reference point to assess the efforts of the applicant employer in obtaining alternative employment does not involve consideration of whether the employer was the strong, moving force towards the creation of the available opportunity.4
[24] In any event, there is no doubt in this case that P&R obtained the alternative employment for Ms Pannell. It organised the position within its own business and has made a definitive offer in such a manner that Ms Pannell could accept the same.
[25] The critical issue here is whether the alternative position was acceptable.
[26] It is well established in this jurisdiction that the concept of acceptable alternative employment is to be determined objectively and that the mere rejection of the alternative does not make it objectively unacceptable. As noted by the Full Bench in Derole:
“What constitutes "acceptable alternative employment" is a matter to be determined, as we have said, on an objective basis. Alternative employment accepted by the employee (and its corollary, alternative employment acceptable to the employee) cannot be an appropriate application of the words because that meaning would give an employee an unreasonable and uncontrollable opportunity to reject the new employment in order to receive redundancy pay; the exemption provision would be without practical effect.
Yet, the use of the qualification "acceptable" is a clear indication that it is not any employment which complies but that which meets the relevant standard. In our opinion there are obvious elements of such a standard including the work being of like nature; the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.” 5
[27] The onus of establishing that the alternative employment in question is acceptable rests with the applicant employer.6 In order to establish whether the alternative employment obtained by the employer is acceptable, it is necessary to have regard to such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and other matters including the location of the employment and travelling time.7
[28] It is also clear that acceptable employment does not mean identical employment and that employees should not unreasonably refuse offers of alternative employment merely because they wish to access the benefits of redundancy pay.8
[29] If the Commission is satisfied that acceptable alternative employment has been obtained, a discretion arises to reduce all or some of the redundancy pay having regard to all of the relevant circumstances. 9
[30] For reasons outlined earlier, I have not extensively considered the other two job locations but note that they indicate that P&R did provide options. They would have involved some relatively extensive travel for Ms Pannell, but in any event, were not pressed by P&R in this matter.
[31] I therefore turn to the consideration of the Malvern position(s). I leave aside for the moment the consideration of any consequences of the process leading to the proposed position. The position(s) at Malvern would in general terms be considered to be objectively reasonable in terms of the normal considerations. Although the Malvern branch is approximately 7km from the Stepney office, that distance would not in the normal course provide a sufficient basis to make the proposal unreasonable. No significant issues about the capacity to travel that extra distance have been raised; however, I note that there are some additional considerations that exist due to Ms Pannell’s caring responsibilities. I will return to this aspect shortly.
[32] There is no indication of any substantive differences in matters such as remuneration, formal hours of work, seniority, workload and job security between the full-time Malvern position and that undertaken at Stepney. In terms of the part-time role, this was a further option and in effect, both the full-time and part-time options were available as alternative positions.
[33] Based upon the material advanced by the parties, I accept that there are features of the position at Stepney that would not have been replicated at Malvern. These are associated with the more informal conditions of employment including the increased capacity to attend to caring responsibilities, such as working at home or attending work with the children when required, which would not be possible to that extent at the smaller Malvern branch. These are important considerations given the objects of the FW Act including to “(assist) employees to balance their work and family responsibilities by providing for flexible working arrangements”. 10 It is not clear on the material before the Commission whether all of this flexibility would have been lost, but I accept that a significant extent of those arrangements would have become problematic in the context of the smaller branch.
[34] Ms Pannell contends that the handling of the process by P&R was such that further employment with them became unacceptable. Amongst other matters, Ms Pannell stated that P&R:
● Initially advised her of the redundancy and indicated that there were no available alternative positions;
● Could not initially confirm what her redundancy entitlements were and when the value of these and other entitlements were provided to her they were wrong and needed to be corrected following information that she obtained;
● Her superannuation, and possibly other entitlements were then not paid out correctly; and
● The process of moving from no alternatives to various options was stressful and adopted by P&R as a means to attempt to avoid their redundancy obligations.
[35] P&R rejects that characterisation of the events. It contends, in effect, that it was consulting with Ms Pannell following the redundancy decision and pursuing redeployment options as it was required to do. Further, whilst it accepts that there were some mistakes in the calculation of entitlements, these were not deliberate and were corrected.
[36] At a general level, the approach as taken by P&R was in line with the expected process. That is, having made a decision to declare the position redundant, consultation occurred and options to mitigate or avoid the loss of employment were advanced and considered. This reflects the consultation obligations evident in most modern awards. However, the advice initially given that there were no alternatives was not appropriate and, combined with the shock of the announcement and lack of information about the redundancy payments that would have been due in that context, would have seriously dented Ms Pannell’s confidence in P&R.
[37] In terms of the mistakes concerning the calculation of entitlements, some of these are explicable as they arise from the need to include earlier casual service. The approach to this issue is not without controversy and a relatively recent decision 11 of the Commission has adopted a particular approach to that issue. There were however some other issues which show a lack of care with the detail, and in some cases, mistakes by an outside service provider. I would accept that none of this was deliberate on the part of P&R; albeit that this has led to some further erosion in the confidence of Ms Pannell.
[38] In relation to the issues arising from the process, I do not consider that they impact upon whether the alternative positions were objectively reasonable. However, they are factors that are relevant to any discretion that arises to modify the redundancy payments.
[39] It is also evident to me that a significant part of the basis for Mr Pannell’s rejection of the Malvern position was her desire not to undermine her friend, who had resigned and was seeking to return. Whilst this is commendable, it does not objectively concern the nature of the alternative employment and I place no weight upon that factor.
[40] On balance, I consider that the full-time position at Malvern was acceptable alternative employment within the meaning of s.120(1)(b)(1) of the FW Act. The factors associated with the informal arrangements operating at Stepney, which were not likely to continue to that extent at Malvern, and those factors arising from the process, are however relevant factors to weighed in terms of the ultimate discretion to be exercised in this case.
5. Discretion, conclusions and orders
[41] Given that the employer had obtained acceptable alternative employment for Ms Pannell, the final issue is whether there should be a reduction (including potentially to zero) in the amount of the redundancy payments. As outlined earlier, this is a matter of discretion to be exercised having regard to all of the relevant circumstances of a particular matter.
[42] Given my findings, I consider that a reduction in the amount of redundancy benefits is warranted. However, the various contrary elements outlined above remain relevant considerations, and given the redundancy and the loss of Ms Pannell’s long-term employment, some meaningful account should be taken of their impact upon her and the decision to decline the alternative positions. I also note that the additional offer of the part-time role was genuine and would have afforded some flexibility for Ms Pannell; however, it would have represented a relatively significant reduction in income.
[43] On balance, I consider that in the particular and rather unique circumstances of this matter, the redundancy payments should be varied to a figure representing nine weeks. I note that this does not include the notice, or pay in lieu of notice, that is required under s.117 of the FW Act, or the other entitlements due upon termination.
[44] An order 12 giving effect to this is being issued in conjunction with this decision.
COMMISSIONER
Appearances:
R Godden, of P&R Electrical Wholesalers Pty Ltd, the applicant employer.
L Pannell, the respondent employee, on her own behalf.
Conference details:
By telephone
2017
18 January.
Final written submissions:
Ms Pannell: 20 January 2017
P&R Electrical: 25 January 2017.
1 Australian Chamber of Manufacturers and Derole Nominees Pty Ltd - Clothing Trades Award 1982 (1), (1990) 140 IR 123 per Peterson J, Marsh DP and Oldmeadow C.
2 Ibid at 127 and 128.
3 [2015] FCAFC 90.
4 Ibid at [19] and [20].
5 Derole at 128.
6 Re Target Retail Agreement 2001, PR916204, 4 April 2002, at para 6.
7 Re Clerks Salaried Staffs (Agriculture Award) 1999, Print S1216, 24 November 1999, drawing upon Derole.
8 See also NUW v Tontine Fibres [2007] AIRCFB 1016 and Spotless Services Australia Limited [2013] FWC 4484 per Sams DP.
9 Re Clerks Salaried Staffs (Agriculture Award) 1999, Print S1216, 24 November 1999, drawing upon Derole.
10 S.3(d) as part of the object to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion.
11 “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) v Donau Pty Ltd[2016] FWCFB 3075.
12 PR590054.
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