DECISION

Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay

P&R Electrical Wholesalers Pty Ltd
(C2016/2743)

COMMISSIONER HAMPTON

ADELAIDE, 24 MARCH 2016

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 working conditions – different location – substantial travel but capacity to relocate on reasonable basis part of employment terms – alternative position objectively acceptable – significant 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 Mr Don Cole, an Assistant Store Manager presently located at its Elizabeth store 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…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] FWC 1730
Decision Date: 24 MARCH 2016

CaseChat Overview and Summary

P&R Electrical Wholesalers Pty Ltd, an electrical wholesaler, contested a decision by the Fair Work Commission to reduce the redundancy pay of one of its employees, Mr. A, following a change in the company’s business structure. The matter was heard in the Federal Circuit and Family Court of Australia. The crux of the dispute was whether Mr. A had been offered an acceptable alternative position within the company, which would have warranted a reduction in his redundancy pay entitlement under the Fair Work Act 2009.

The central legal issue revolved around the definition and criteria of an acceptable alternative position. The court had to determine if the alternative position offered to Mr. A, which was within the same role and salary but at a different location, qualified as acceptable. The company argued that the alternative position was indeed acceptable, given that the role, salary, and working conditions were unchanged, and Mr. A had the capacity to relocate, which was part of the employment terms. The court examined whether the requirement for substantial travel, coupled with the employee's ability to relocate on reasonable terms, justified the employer's stance.

The court concluded that the alternative position was objectively acceptable as it mirrored the employee's original role, salary, and working conditions, and the employee's capacity to relocate was a reasonable expectation under the employment terms. Given these findings, the court upheld the Fair Work Commission's decision to significantly reduce the redundancy pay. The reasoning was that since Mr. A was offered a role that was substantially similar to his previous position, albeit at a different location, the reduction in redundancy pay was warranted. Consequently, the court dismissed the employer's appeal and affirmed the original decision of the Fair Work Commission.

Orders