Royal Society for the Prevention of Cruelty to Animals Western Australia Inc. T/A RSPCA WA

[2019] FWC 8662

[2019] FWC 8662

FAIR WORK COMMISSION

DECISION

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

Royal Society for the Prevention of Cruelty to Animals Western Australia Inc. T/A RSPCA WA
(C2019/7374)

DEPUTY PRESIDENT BULL SYDNEY, 23 DECEMBER 2019

S.120 application to vary NES redundancy pay entitlement. Offer of other acceptable employment. Redundancy entitlement reduced by 85%.

Background

[1] The Royal Society for the Prevention of Cruelty to Animals Western Australia Inc. T/A RSPCA WA (the employer) has made an application pursuant to s.120(2)of the Fair Work Act 2009 (the Act) to reduce the National Employment Standard (NES) redundancy entitlement of Mr Darren Nicholls. Mr Nicholls has worked for the employer since 7 May 2018 in both a part-time and full-time capacity and on 18 October 2019 his role was made redundant. In accordance with the NES redundancy provisions he was entitled to 4 weeks redundancy pay. The employer’s application seeks to reduce this entitlement by 85%, to three days’ pay.

[2] The employer seeks to reduce Mr Nicholls’ redundancy entitlement on the basis that it has obtained other acceptable employment for Mr Nicholls. The employer confirmed in its application that Mr Nicholls previously held the role of Community Fundraising Coordinator, which was a permanent full-time role. That role was made redundant and occurred in the context of an organisational restructure, in which a number of redundancies were made for reasons relating to the organisation's poor financial circumstances. The employer confirmed that Mr Nicholls was offered and accepted a new permanent part-time role of Planned Giving Coordinator.

[3] The employer stated that Mr Nicholls accepted the new role on the basis that the employer would make an application to the Commission to reduce the redundancy pay payable to Mr Nicholls of 4 weeks by 85%, to three days.

[4] Mr Nicholls’ redundancy entitlement of 4 weeks redundancy is said by the employer to be the NES entitlement which is provided for at cl 4.13 of the RSPCA WA General Staff Collective Agreement 2009, which refers to theAct.

[5] On 5 December 2019, the Commission wrote to Mr Nicholls by email attaching a copy of the employer’s application and requesting Mr Nicholls to provide any response to the application by no later than close of business on 12 December 2019. The Commission has not to date received any correspondence from Mr Nicholls.

Legislative Framework

[6] As stated above, the application by the employer is made pursuant to s.120(2) of the Act, which provides the Commission with discretion to reduce or remove an entitlement to the NES redundancy pay entitlement, should the Commission consider it appropriate.

[7] Section 120(2) of the Act is couched in the following terms:

“120(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.”

[8] Section 120(2) only 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.”

[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] Redundancy payments are intended to compensate for the loss of non-transferrable credits such as sick and long service leave as well as other entitlements based on length of service and the inconvenience and hardship imposed on employees, as discussed in the Redundancy Case.⁵

[13] It is a serious course of action for the Commission to make an order to limit or remove an employee’s statutory entitlements to redundancy pay. The employer must demonstrate that they have ‘obtained other acceptable employment’ for the employee concerned before the discretion provided in s.120(2) of the Act can be invoked.

[14] The Commission must determine whether the job offer constitutes obtaining other acceptable employment. The Full Court of the Federal Court in FBIS International Protective Services (Aunt) Pty Ltd v Maritime Union of Australia⁶ 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.

[15] It is well established that the onus rests with the employer who seeks to reduce redundancy payment obligations⁷ to its employees.

[16] There is no dispute in this application that the employer has made an alternative job offer to Mr Nicholls in the sense that it ‘obtained’ for Mr Nicholls other alternative employment, which he has accepted.

[17] To establish the acceptability of alternative employment, the test is an objective one, involving a consideration of matters such as hours of work, pay levels, recognition of previous service, fringe benefits, distance of travel to job, workload, job security and other matters.⁸

[18] There is no requirement that the new job offer be identical or broadly comparable with the redundant position as is most unlikely that identical work will be able to be offered by the employer within its business when the same role has become redundant. As SDP Watson stated in Felted Australia Pty Ltd v Textile, Clothing and Footwear Union of Australia: 9

“I accept the proposition advanced by Felted Australia that acceptable alternative employment is not necessarily identical employment and that the AIRC has previously found alternative employment to be acceptable notwithstanding inconvenience to employees and some detrimental alteration to the terms and conditions of employment.”

[19] A similar finding was made in Spotless Services Australia Limited T/A Alliance Catering [2016]. 10

[20] Further, VP Lawler stated in Datacom Systems Vic Pty Ltd v Raisa Khan; Siddhartha Desai: 11

“Other employment does not cease to be “acceptable” merely because it is on terms that are less advantageous to that of the terminating position. Tontine makes it clear that there are matters of degree involved.”

[21] As stated above, the new role of Planned Giving Coordinator was offered to Mr Nicholls following his redundancy which occurred in the context of an organisational restructure, in which a number of redundancies were made for reasons relating to the organisation's poor financial circumstances.

Consideration

[22] The employer attached to its application a copy of the contract of employment and provided a comparison of the two roles, with the following changes identified:

•  Increase of $0.53/hour for the hourly rate;

•  Reduction of $5,548.09 over the year, due to reduction in hours;

•  Similar days with a decrease of 7.6 hours per fortnight with every 2nd Friday not working;

•  No change to location, being Malaga;

•  No change to basis of engagement, being permanent; and

•  No change to recognition of prior service.

[23] On balance, and accepting the reduction in Mr Nicholls’ hours, and change from a permanent full-time role to a permanent part-time role, I consider the position of Planned Giving Coordinator to be an acceptable employment offer.

[24] As noted above Mr Nicholls, upon being invited to do so, did not raise any objection to the application.

[25] The employer has satisfied the Commission that in all the circumstances, the discretion available to reduce its legislative redundancy pay obligations to Mr Nicholls should be exercised to the extent sought.

Conclusion

[26] On the basis of the above, I consider it an appropriate exercise of the Commission’s jurisdiction to reduce the redundancy entitlement of Mr Nicholls by 85%, to an entitlement of 3 days’ redundancy pay.

[27] An order will issue reflecting this decision.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<PR715536>

1 (1984) 8 IR 34.

2 Ibid at 75.

3 (1984) 9 IR 115.

4 Ibid at 135.

5 Termination Change and Redundancy Case (1984) 8 IR 34; AIRC Print F6230 at p.50.

6 [2015] FCAFC 90.

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

8 Ibid at 230-231.

 9   PR974699 at [89].

 10 FWC 4820 at [65].

 11   [2013] FWC 1327 at [9].