Palm Pizza Pty Ltd T/A Domino's Pizza v Morgan Cronin

[2020] FWC 6594

[2020] FWC 6594

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Palm Pizza Pty Ltd T/A Domino’s Pizza
v
Morgan Cronin
(C2020/8634)

DEPUTY PRESIDENT BULL SYDNEY, 9 DECEMBER 2020

Application to vary redundancy pay - Application granted amount reduced to nil.

[1] In this matter, Palm Pizza Pty Ltd (the applicant) trading as Domino’s Pizza seeks relief from its statutory obligation to make a redundancy payment of 6 weeks to its previous employee, Mr Morgan Cronin, by reducing the amount payable to nil. The application was completed by Anita Badke in her role as a director of the applicant.

[2] The application was made pursuant to s.120(2) of the Fair Work Act 2009 (the Act) which provides the Commission with a discretion to reduce or remove an entitlement to redundancy pay should the Commission consider it appropriate. Section 120(2) of the Act is couched in the following terms:

“120(2) On application by the employer, FWC may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that FWC considers appropriate.”

[3] Section 120(2) of the Act applies where the terms of s.120(1) are met:

“120(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.”

(my emphasis)

[4] The application stated that Mr Cronin had been employed since July 2018 and in November 2019 commenced in a full-time position. The application further stated that Mr Cronin was covered by the Fast Food Award which is taken to be the Fast Food Industry Award 2010 (the Award). The Award provides at clause 15 Redundancy; that redundancy pay is provided for in the National Employment Standards (NES).

[5] The Commission was not advised of any enterprise agreement that applied to Mr Cronin’s employment.

[6] Section 119 of the Act sets out a minimum NES entitlement to redundancy pay for national system employees. The exclusions from redundancy pay provided for in s.121 of the Act were not raised in this application. Based on Mr Cronin’s length of service he would be entitled to 6 weeks’ redundancy pay.

[7] The application proceeds on the basis that the applicant obtained other acceptable employment for Mr Cronin which he has declined.

[8] On 27 November 2020, the Commission sent to Mr Cronin’s email address as provided by the applicant, a copy of the application with a request to provide any response by no later than 4pm Friday 4 December 2020. As at 9 December 2020, as no response has been received, the Commission contacted by telephone both Mr Cronin and Ms Badke separately, where further details on the application were provided by both parties.

[9] The statutory provision to enable a reduction in redundancy entitlements arises historically from a decision of a Full Bench of the Australian Conciliation and Arbitration Commission in the Termination, Change and Redundancy Case (theRedundancy Case).¹ This case introduced a general severance pay entitlement under federal awards for employees whose employment was terminated on account of redundancy.

[10] In the Redundancy Case, employers submitted that it would not be appropriate, where alternative employment had been secured for the employee concerned, for the employee to then receive a redundancy benefit. The Full Bench stated:

“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. However, we would make it clear that we do not envisage severance payments being made in cases of succession, assignment or transmission of a business.”2

[11] Later in that case, the Full Bench considered the terms of an amendment to the Metal Industry Award 1984 that should be made to reflect its decision.³ The Full Bench ruled that the following provision should be included in the amendment to that award:

“An employer, in a particular redundancy case, may make application to the Commission to have the general severance pay prescription varied if he/she obtains acceptable alternative employment for an employee.”4

[12] Pursuant to s.121(b)(i) the Commission must determine whether the applicant has obtained other acceptable employment for Mr Cronin that he has subsequently declined. The Full Court of the Federal Court in FBIS International Protective Services (Aunt) Pty Ltd v Maritime Union of Australia⁵ stated that if an offer of alternative employment has been made by the employer and the employee does not accept it, then the question turns to whether the offer was an acceptable one.

[13] It is well established that the onus rests with the employer who seeks to activate the exemption from redundancy payment obligations to an employee.⁶ The applicant states that an alternative job offer was made to Mr Cronin which he declined.

[14] To establish the acceptability of alternative employment, the test is an objective one.⁷ There is no requirement that the new job offer be identical or broadly comparable with the redundant position. 8

[15] The application states that the business was sold to a new franchisee. Mr Morgan was offered the same role as his existing position with the applicant with the new owner of the new franchisee upon its takeover. Mr Morgan was also said to have been offered the opportunity to move to a neighbouring store with an alternative new franchisee if he wished to.

[16] The application further states that Mr Morgan met with the new franchisee of the business and agreed to think about the offer of the same full-time position with the new franchisee but the next day advised that he would not be taking the alternative position as he would like to concentrate on his studies as his primary focus instead of working and studying.

[17] Mr Morgan advised the Commission that he had previously occupied the position of Store Manager with the applicant’s business and was offered the same position with the new franchisee with the same rate of pay and conditions, although in his view the position had more responsibility, in any event he declined the offer.

[18] Ms Badke advised that the applicant had sold two Domino’s franchises, one in Byron Bay, and the other in Kingscliff NSW, and all existing employees were offered positions with the new owners which is the standard practice with franchise sales. Mr Cronin was offered the position as store manager with both new owners but declined the offers while all other employees accepted positions with the new franchisees.

[19] I consider that the offer by the applicant made to Mr Morgan of Store Manager on the same pay rate with the new franchisee to be an acceptable employment offer as per s.120(1)(b)(i) of the Act, accepting that it may have involved some additional responsibility. The applicant has therefore satisfied the Commission that the discretion available to reduce its redundancy pay obligations to Mr Morgan should be exercised by reducing the entitlement of 6 weeks to nil.

[20] An order will issue with this decision [PR725296] reflecting the reduction to nil of Mr Morgan’s statutory redundancy entitlement.

DEPUTY PRESIDENT

Matter deal with on the application

Printed by authority of the Commonwealth Government Printer

<PR725237>

1 (1984) 8 IR 34.

2 Ibid at 75.

3 (1984) 9 IR 115.

4 Ibid at 135.

5 [2015] FCAFC 90.

6 Clothing and Allied Trades Union v Hot Tuna (1988) 27 IR 226, Re Target Retail Agreement 2001, PR916204, 4 April 2002, at para 6.

7 Ibid at 230-231.

 8   Felted Australia Pty Ltd v Textile, Clothing and Footwear Union of Australia:PR974699 at [89].