Ryans Freight Trust T/A Ryans Freighters v Andrew Timms

[2014] FWC 7817

[2014] FWC 7817

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Ryans Freight Trust T/A Ryans Freighters

v

Andrew Timms

(C2014/6633)

COMMISSIONER GREGORY MELBOURNE, 12 DECEMBER 2014

Application for variation of redundancy pay.

Introduction

[1] Mr Andrew Timms has worked with Ryans Freight Trust (“Ryans Freighters”) since 8 December 2012. During that time he has worked as a driver carrying out local deliveries in the Warrnambool region. However, Ryans Freighters has recently outsourced this part of its business to another Warrnambool-based company, Allens Freight.

[2] As a consequence of this change Mr Timms was made redundant from Ryans Freighters. He last worked for the business on Friday, 3 October 2014. At that time he had an entitlement to redundancy under the National Employment Standards of an amount equivalent to 4 weeks pay. However, Mr Timms was employed by Allens Freight without any break in employment in a role that was essentially the same as his previous role at Ryans Freighters, and at the same rate of pay. He commenced with Allens Freight on Monday, 6 October 2014.

[3] Ryan’s Freighters have accordingly made this application under s.120 of the Fair Work Act (Cth) (“the Act”) seeking to vary the amount of redundancy pay it would otherwise be required to pay to Mr Timms on the basis that it has obtained other acceptable employment for him. Mr Timms opposes the application.

[4] The hearing on 1 December 2014 was conducted by telephone. Mr Graham Ryan, the Managing Director of Ryans Freighters, and Ms Michelle Duynhoven, the HR Manager, appeared on behalf of the Applicant. Mr Timms appeared on his own behalf.

The Issue to be Determined

[5] Section 120 of the Act enables an application to be made to the Commission for variation of a redundancy pay entitlement. It states:

“(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.” 1

[6] The following issues accordingly remained to be determined:

1. Has Ryans Freighters obtained “other acceptable employment” for Mr Timms as defined in s.120 of the Act?

2. If so, is it appropriate for the Commission to exercise its discretion to reduce the amount of the redundancy pay entitlement otherwise due to Mr Timms?

The Evidence and Submissions

[7] The submissions provided by Ryans Freighters indicated that the economic situation facing the business led it to review its freight distribution operations. The outcome of that review was a decision to outsource its local freight operations, and to focus on the linehaul component of the business. As a consequence a contract was entered into with another local business, Allens Freight, to take on the local freight distribution operation.

[8] Ryans Freighters provided a summary of the communication with its employees that followed after this decision was confirmed. It indicated as follows:

• 15 September – the staff as a whole were informed of the decision. A letter was also sent to the employees, including Mr Timms, from the Managing Director, Mr Graham Ryan, in the following terms:

“The purpose of this letter is to confirm the outcome of a recent review by Ryans Freight Trust t/a Ryans Freighters (the employer) of its operational requirements, and what this means for you.

For the sustainability of Ryans, a business decision has been made that all local deliveries will be outsourced and the “Local” division will be closed in October 2014. As a result the position of a Local Driver / Forklift Operator is no longer needed. This decision is not a reflection on your performance.

The “Local” operation will be performed by Allens Freight. You will have an opportunity to secure a position with Allens Freight through an interview. Our hope is that this change secures your position in the Transport Industry ongoing.

If you would like to continue your employment with Ryans, we would like to offer you a position as a long distance driver, based at Warrnambool, Allansford or Melbourne.

Please consider the above positions.” 2

• 15 – 19 September – individual discussions were held with all staff members offering them the option of other alternative employment with Ryans Freighters, or the option of continuing in their existing role, but with Allens Freight as their new employer.



• 17 September – Mr Richard Allen from Allens Freight met with staff individually to understand their current roles and assess their future intentions.



• 17 – 26 September – further discussions took place between the two businesses about the changes.



• 30 September – the employees participated in a group discussion with representatives from Allens Freight.



• 1 October – a final decision was confirmed in regard to each of the 14 employees affected. The outcome was that 1 administrative employee was made redundant; 1 employee accepted another ongoing role with Ryans Freighters; 9 employees moved to work with Allens Freight; and 2 other employees resigned because they had found work elsewhere.

• 3 October – this was the last day on which Ryans Freighters carried out the local freight distribution work.



• 6 October – the former Ryan Freighters employees, including Mr Timms, commenced employment with Allens Freight.

[9] Ryans Freighters submits accordingly that Mr Timms finished employment with the business on Friday, 3 October and commenced employment with Allens Freight on the following Monday, 6 October. The arrangement entered into between the two businesses involved them sharing premises. Mr Timms continued to work from the Ryans Freighters site, using the same vehicles and delivering to the same customers. His pay rate and other working conditions were also maintained. Mr Timms also had 91.5 hours of annual leave accrued at the time and this was paid out to him, including with the associated annual leave loading.

[10] It also submitted that Mr Timms had the opportunity of remaining with Ryans Freighters if he wished, working in the linehaul operation, rather than in local freight distribution.

[11] Ryans Freighters submits in conclusion it has done what is required to satisfy the test of obtaining “other acceptable employment,” and it is not in dispute that Mr Timms is now involved in an ongoing role that is virtually identical to the work he was doing when employed by Ryans Freighters. He is employed on the same terms and conditions as existed previously.

[12] Mr Timms did not take issue with much of the material relied on by Ryans Freighters in support of its application. However, he did indicate that he had been taken on by Allens Freight on the basis of a six-month trial, and there were no guarantees about what would happen beyond this point. However, he was now working 40 hours each week, including 2 hours overtime at the same rate of pay as he received previously when employed by Ryans Freighters.

[13] He also confirmed his accrued annual leave has been paid out by Ryans Freighters. However, he also had an amount of personal leave accrued at the point at which his employment concluded with Ryans Freighters, and this accrued entitlement was not transferred or taken on by Allens Freight. He therefore commenced with Allens Freight as a new employee with no accrued leave entitlements.

[14] In response to the submissions made by Mr Timms about the future uncertainties associated with the ongoing role with Allens Freight Mr Ryan indicated in response that if ongoing work was not available in the future with Allen’s Freight there would be opportunities again available for Mr Timms with Ryans Freighters.

Consideration

[15] The manner in which the provisions now contained in s.120 of the Act are to be applied have been considered in a number of previous decisions of the Tribunal. In the matter of Derole Nominees Pty Ltd v the Australian Chamber of Manufactures 3 (“Derole Nominees”) the Tribunal considered what the meaning of “obtains” requires in the context of obtaining acceptable employment for an employee. The Full Bench held, firstly, that that it cannot mean obtain “in the fullest sense possible” because one employer is incapable of affecting a contract of employment with its employees and another employer. Therefore, it must be given “some lesser meaning.” The Full Bench concluded:

“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.” 4

[16] In Datacom Systems Vic Pty Ltd v Rasiq Khan; Siddharth Desai 5 (“Datacom”) Vice President Lawler also expressed the view that the word “obtains” in the context of s.120 should be given a very broad interpretation. It is also clear from these authorities that it is a test to be applied on an objective basis, and not to be applied simply on the basis of whether the employee wishes to take on the role being offered or not.

[17] Vice President Lawler in Datacom also stated that:

“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.” 6

[18] However, a recent decision of a Full Bench of the Commission in the matter of Maritime Union of Australia v FBIS International Protective Services (Aust) Pty Ltd 7 is also noted in this context. It involved an appeal from an earlier decision of a single member. At [54] the Full Bench stated:

“In our view, the limited actions of the Respondent, which did no more than establish contact between its employees and ACG, with the effect that employees were able to participate in the recruitment processes of ACG falls well short of action which “causes acceptable alternative employment to become available to the redundant employee” and the Respondent was not a ‘strong, moving force towards the creation of the available opportunity’.” 8

[19] The circumstances which led to Mr Timms’ redundancy stem from the outsourcing of part of Ryan Freighters traditional business operations, being its local freight delivery. However, the changes occurred in a way that appears to have been a harmonious and cooperative process between the two businesses. It also appears to have involved genuine consideration about the interests of the employees involved, and the impact upon them.

[20] The sequence of events referred to in the submissions of Ryans Freighters outlined the degree of cooperation between the two businesses and the involvement of the employees in those processes, including the various discussions that took place between Ryans’ employees and the representatives from Allens Freight. Ryans Freighters also underpinned the process of change by offering ongoing employment if any employee was not able to gain employment with Allens Freight.

[21] It is acknowledged that the outsourcing arrangement entered into with Allen’s Freight did not appear to involve a guarantee that it would take on all existing Ryans Freighters employees who wanted to move to work with the new business. It is also noted that absent any such guaranteed commitment “obtains” cannot mean obtain “in the fullest sense possible,” as the decision in Derole Nominees indicates, because one employer is incapable of affecting a contract of employment with its employees and another employer.

[22] However, I am satisfied that Ryans Freighters has been a strong moving force in enabling its former employees to now obtain work with Allens Freight on the same terms and conditions, working from the same location, driving the same vehicles, and delivering to the same customers, as existed previously. It is difficult, in fact, to know what more it could have done, short of obtaining some sort of guaranteed commitment from Allens Freight as part of the contractual arrangements associated with the outsourcing of the local freight distribution business.

[23] These factors also provide strong evidence to suggest it was acceptable alternative employment. The only factor that might perhaps work against this conclusion is that the new employer has not recognised Mr Timms’ previous accrued personal leave entitlements. His accrued annual leave was paid out by his former employer but his accrued personal leave entitlements were not taken on by Allens Freight. This does provide some detriment to him in the event that he needs to take personal leave in the future for whatever reason. However, Mr Timms had only been employed for a period of less than 2 years and could only have a limited personal leave entitlement in any case.

[24] However, the fact he received a payout of his annual leave in advance of actually taking that leave does provide some additional benefit to him. Mr Timms also raised issues about whether he was likely to remain in ongoing employment with Allens Freight, given that he was initially employed on a six-month trial period. However, remaining in ongoing employment will always be a concern for any employee, and clearly there are no guarantees in this regard. I consider his concerns in this regard are little different from when he was employed by Ryans Freighters. Future ongoing employment opportunities can never be guaranteed and will always be subject to a range of factors impacting on both the individual employee and the business.

Conclusion

[25] I am satisfied that in all the circumstances Ryans Freighters has obtained other employment for Mr Timms. I am also satisfied it is “acceptable employment” in the context of s.120(1)(b) of the Act.

[26] I am also satisfied that Ryans Freighters should be relieved of any obligation to make redundancy payments to Mr Timms. In coming to this conclusion I have had particular regard to the fact he remains in employment with Allens Freight on terms and conditions of employment that are identical to those he was previously employed on at Ryans Freighters. I have also had regard to the fact his accrued annual leave entitlements at the time his employment with Ryans Freighters ended were paid out in full, including with the entitlement to annual leave loading, which would otherwise only have been available when the leave was taken.

[27] Orders giving effect to this outcome will be issued in conjunction with this decision.

COMMISSIONER

Appearances:

Mr Graham Ryan and Ms Michelle Duynhoven appeared on behalf of the Applicant.

Mr Andrew Timms appeared on his own behalf.

Hearing details:

2014.

Melbourne (by telephone)

29 October.

 1   Fair Work Act 2009 (Cth) at s.120

 2   Letter dated 15 September from Graham Ryan to Neil Campbell

 3 (1990) 140 IR 123

 4   Ibid at 128

 5   [2013] FWC 1327

 6   Ibid at [9]

 7   [2014] FWCFB 6737

 8   Ibid at [54]

Printed by authority of the Commonwealth Government Printer

<Price code C, PR557359>