Savco Vegetation Services Pty Ltd
[2021] FWC 6239
•4 NOVEMBER 2021
| [2021] FWC 6239 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay
Savco Vegetation Services Pty Ltd
(C2021/3906)
COMMISSIONER CAMBRIDGE | SYDNEY, 4 NOVEMBER 2021 |
Variation of redundancy pay
[1] This Decision is made in respect of an application taken under s. 120 of the Fair Work Act 2009 (the Act). The application was lodged with the Fair Work Commission (the Commission) at Sydney on 7 July 2021.The application was made by Savco Vegetation Services Pty Ltd (ABN:78 161 366 749) trading as Savco and Savco Payroll Pty Ltd (17 626 576 627) trading as Savco. The application indicated that the applicant employer was represented by Mr Colin Dorber from Workplace Connect Pty Ltd t/a Employer Protect (Employer Protect).
[2] Although the application was made by two separately identified entities, the submissions which were subsequently made by Employer Protect asserted that the “true employer of the Respondent Employees is Savco Vegetation Services Pty Ltd T/A Savco…” and that the “role of Savco Payroll Pty Ltd is prefunctory [sic] and only serves as a mechanism to pay employees of Savco and otherwise serves no function in hiring and instruction of employees.” For the purposes of this Decision, the application will be considered to have been made by Savco Vegetation Services Pty Ltd (ABN:78 161 366 749) trading as Savco (the employer or Savco).
[3] The application seeks a determination of the Commission to reduce the amount of redundancy pay that would otherwise represent an entitlement purportedly derived from s. 119 of the Act, and payable to Andrew Corcoran (the 1st respondent employee), Mitchell Hogan (the 2nd respondent employee), Miles Lawrence (the 3rd respondent employee), Mark Pooley (the 4th respondent employee) Ron Simpson (the 5th respondent employee), Derek Starr (the 6th respondent employee), Toby Steadman (the 7th respondent employee), Timothy Swan (the 8th respondent employee) and Mitchell Trembath (the 9th respondent employee) The 9 named respondent employees are collectively referred to as the respondent employees.
[4] The application seeks to reduce each of the respondent employees’ redundancy entitlement from respectively, 8, 10, 11, 4, 10, 11, 7, 8, and 6 weeks’ pay to nil in each case. The reduction to the respondent employees’ redundancy entitlements has been advanced on the basis that the employer obtained other acceptable employment for each of the respondent employees.
[5] On 15 July 2021, the matter was the subject of a Mention and Directions proceeding conducted by the Commission via telephone. At the proceedings held on 15 July, Mr Dorber fromEmployer Protect, together with the employer’s Director and Contracts Manager, Mr A Savige, appeared for the employer, and Mr D Austin from the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) appeared for the 1st respondent employee, the 2nd, 8th and 9th respondent employees each appeared unrepresented, and the other respondent employees did not participate in the proceedings.
[6] During the proceedings held on 15 July, the Commission issued Directions which firstly fixed the date of 26 July 2021, by which time the respondent employees were required to provide written submissions in support of any objection to the employer being granted permission pursuant to s. 596 of the Act, to be represented by lawyers or paid agents. Secondly, the Commission issued further Directions for the Parties to file and serve their respective documentary cases in accordance with a timetable that concluded with the Parties providing advice as to whether any Party sought a Hearing of the matter, or alternatively, if the respective Parties were content for the matter to be determined upon the filed documentary material.
[7] On 19 July 2021, the 8th respondent employee provided the Commission with an email indicating that he had “no objection on Savco using paid help”. On 30 July 2021, the Commission received an email communication purportedly on behalf of the 3rd respondent employee which stated that “Miles Lawrence has no objection to the employer being represented by their lawyers or other representatives.” No written submissions opposing permission being granted for the employer to be represented by lawyers or paid agents were provided to the Commission. Consequently, the Commission has been satisfied that the requirements of s. 596 of the Act have been met and has decided to grant permission for any of the Parties to be represented by lawyers or paid agents.
[8] In due course, the employer filed and served material broadly in accordance with the Directions issued on 15 July 2021. On 13 August 2021, the 8th respondent employee sent an email to the Commission which relevantly advised that he had “…voluntarily signed a confidential agreement with my former employer in Case No: C2021/3906 and I wish to withdraw from the proceedings.” In response to this communication, the Commission advised that the 8th respondent employee had been removed as a respondent in the matter.
[9] On 17 August 2021, the employer filed and served evidence and submissions in support of the application and strangely included a Form F50 Notice of discontinuance which had been duly executed by Mr Dorber. The covering email from Employer Protect included the following: “We have been instructed from the Applicant that the sixth respondent, Mr Derek Starr, is currently employed by the Applicant. Due to this information, we respectfully request that the matter of Savco v Derek Starr be discontinued from the Commission.”
[10] On 24 August 2021, the Commission responded to the Notice of discontinuance that had been provided by Employer Protect and considering the information contained in the covering email, relevantly advised that a Notice of discontinuance could not operate to remove a respondent but would instead operate to discontinue the proceedings. Further, the Commission advised that if the employer sought to have Mr Starr removed as a respondent, then Mr Starr would need to confirm that position, and in the circumstances, the Commission would not act on the Notice of discontinuance that had been provided as it would cease all proceedings in the matter.
[11] On 19 August 2021, the 5th respondent employee sent an email to the Commission which relevantly advised that he had “…voluntarily signed a confidential agreement with my former employer in case # C2021/3906 & wish to withdraw from proceedings.” In response to this communication, the Commission advised that the 5th respondent employee had been removed as a respondent in the matter.
[12] On 25 August 2021, the 9th respondent employee sent an email to the Commission which relevantly advised that he had “…voluntarily signed a confidential agreement with my former employer in Case No C2021/3906 and I wish to withdraw from the proceedings.” In response to this communication, the Commission advised that the 9th respondent employee had been removed as a respondent in the matter.
[13] On 13 September 2021, the CEPU, acting for the 1st respondent employee, filed and served evidence and submissions broadly in accordance with the Directions issued on 15 July 2021.
[14] On 10 September 2021, the Commission received an email which was forwarded on behalf of the 3rd respondent employee and relevantly advised that he had “…voluntarily signed a confidential agreement with my former employer in Case No C2021/3906 and wish to withdraw from the proceedings.” In response to this communication, the Commission advised that the 3rd respondent employee had been removed as a respondent in the matter.
[15] On 14 September 2021, the 2nd respondent employee sent an email to the Commission which relevantly advised that he had “…voluntarily signed a confidential agreement with my former employer in Case No: C2021/3906 and wish to withdraw from the proceedings.” In response to this communication, the Commission advised that the 2nd respondent employee had been removed as a respondent in the matter.
[16] On 16 September 2021, the 7th respondent employee sent an email to the Commission which relevantly advised that he had “…voluntarily signed a confidential agreement with my former employer in Case No C2021/3906 and I wish to withdraw from the proceedings.” In response to this communication, the Commission advised that the 7th respondent employee had been removed as a respondent in the matter.
[17] On 28 September 2021, the Commission received correspondence from Mr Dorber at Employer Protect which relevantly stated: “I understand that only one Respondent now remains and that is Mr Corcoran, represented by his Union. All other Respondents have settled on agreed terms with Deeds of Agreement and Release in place”. This communication also advised that: “On behalf of the Applicant I confirm no further material is to be supplied.” Further, this communication confirmed that the employer and the 1st respondent employee were content for the application to be determined by way of analysis and consideration of the filed documentary material and without the need for any Hearing.
[18] On 29 September 2021, the 4th respondent employee sent an email to the Commission which relevantly advised that he had “…voluntarily signed a confidential agreement with my former employer in Case No: C2021/3906 and wish to withdraw from the proceedings”. In response to this communication the Commission advised that the 4th respondent employee had been removed as a respondent in the matter.
Relevant Factual Circumstances
[19] On 6 April 2021, the employer received notification that it had been unsuccessful in its tender bid for a contract with Essential Energy for work involving clearance and vegetation management around high-voltage electrical supply infrastructure in the north-west region of New South Wales (the Essential Energy contract). Due to this loss of the Essential Energy contract, the employer determined that it would no longer be viable to continue the employment of inter alia, the 1st respondent employee, Mr Corcoran.
[20] On or about 7 April 2021, the General Manager of the company that had been successful in securing the Essential Energy contract, Falbury Pty Ltd T/A ETS Vegetation Management (ETS), made telephone contact with the employer’s Director and Contracts Manager, Mr A Savige whereupon discussion occurred about “transitioning as many staff across to ETS that ETS was comfortable to move across.” 1 On or about the following day, 8 April 2021, further discussions occurred between management representatives of Savco and ETS which resulted in “an agreement in principle for ETS and Savco to work together and transition Savco staff to ETS…”2
[21] On or around 19 April 2021, a teleconference meeting was held between management representatives of Savco and ETS which included discussion about advising Savco employees to respond to online employment advertisements placed by ETS at a website referred to as SEEK. Shortly after this teleconference, Savco provided ETS with some training records for staff that were anticipated to transition from Savco to ETS.
[22] On 30 April 2021, the employer provided general formal advice to its employees of the loss of the Essential Energy contract and the potential implications in respect to ongoing employment. On 7 and 13 May 2021, the employer facilitated staff meetings which involved ETS management and provided information about transitioning staff from employment with Savco to ETS.
[23] In early May 2021, the 1st respondent employee, Mr Corcoran, made an online application at the SEEK website for a position advertised with ETS. Mr Corcoran was subsequently invited to an interview process, and on 27 May 2021, he received an email letter from ETS offering him employment with an anticipated date of commencement of 15 June 2021. Subsequently, the commencement date was altered to 5 July 2021.
[24] On 31 May 2021, ETS provided Savco with a list of names of individuals who had received offers of employment from ETS. This list included inter alia, the 1st respondent employee, Mr Corcoran, who had been offered a position of a “Scoper” at the Tamworth depot.
[25] Also on 31 May 2021, the employer sent formal notification of termination of employment to inter alia, the 1st respondent employee, Mr Corcoran. The termination of employment letter included formal confirmation that employment would conclude due to redundancy effective from close of business Friday, 2 July 2021. Further, the letter advised that all accrued entitlements including annual leave, superannuation, and long service leave would be paid on the last day of service.
[26] The termination of employment letter also included extensive information regarding redundancy and relevantly stated:
“Company assisted employment with new Tender holders.
The company is engaged in exercises to bring about (wherever we can) employment of current staff in similar work, similar rates of pay, in the geographic location in which they are currently based.
A number of staff have already undergone interviews as a result of our actions. Employees requiring time off for medical examinations or interviews will be able to take that as paid time, just contact your supervisor, or Mr Peter Kemp for further advice (Mobile: [redacted]).
Please note that staff that are successfully redeployed, and who accept employment with the new service provider, will be the subject of an application to the Fair Work Commission (FWC) that redundancy severance pay not be paid. (All other entitlements will be paid, including (where eligible) accrued Long Service Leave) - please note that accrued personal/carer’s leave is not payable on termination.
The basis of the application will be that, effectively albeit with a new employer, the relevant employees will continue to do the same work that they now do at the same or similar rates to those that they now receive, without a break in employment, and therefore severance payments could be reduced or not paid at all. The decision is taken by the independent umpire, the Fair Work Commission, and we will stand by any decision that they make.”
[27] Consequently, the employer advanced the application taken under s. 120 of the Act, seeking a variation of the redundancy pay that, inter alia, the 1st respondent employee was entitled to receive on the basis that, in accordance with subsection 120 (1) (b) (i) of the Act, it had obtained other acceptable employment for inter alia, the 1st respondent employee, and it sought to have the amount of redundancy pay reduced from 8 weeks to nil.
The Case for the Employer
[28] The submissions made on behalf of the employer mentioned that although it “has” an enterprise agreement, that being the Savco Pty Ltd and the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (ETU Division) Infrastructure and Electrical Vegetation Union Collective Agreement 2009-2011 (the EA), the EA had expired, and that the work conducted by the employer and the duties of the respondent employees fell within the definition provided by the Electrical Power Industry Award 2020 [MA000088] (the Award). Consequently, the submissions made on behalf of the employer asserted that the respondent employees were subject to the National Employment Standards (NES), the terms and conditions of their letters of employment, and the Award. Therefore, it was submitted that as the employer had 61 employees at the date of the termination of employment of the respondent employees, the respondent employees were entitled to be paid redundancy pay in accordance with s. 119 of the Act.
[29] The employer made submissions in support of the proposition that it had obtained other acceptable employment for inter alia, the 1st respondent employee, Mr Corcoran, and that these circumstances satisfied the requirements of s. 120 (1) (b) (i) of the Act. The employer submitted that the employment that it had secured for Mr Corcoran et al, was, when objectively considered, acceptable employment. The employer submitted that the rates of pay, hours of work, work locations, and workloads were all comparable such that when viewed objectively the other employment should be found as acceptable.
[30] The employer further submitted that it was a strong moving force towards the creation of the available opportunity for the respondent employees to be hired by ETS. The submissions made on behalf of the employer asserted that it had undertaken serious and ongoing negotiations with ETS which resulted in assurances from ETS management that they would provide offers of employment to the respondent employees. It was further asserted that the employer encouraged and was assured by ETS, that offers of employment to the respondent employees would be made where possible to include comparable terms and conditions.
[31] The further submissions made by the employer relied upon the purpose for which redundancy payments were established and contended that because the respondent employees stepped into acceptable employment immediately after termination of employment with the employer, the underlying purpose for payment of redundancy had not been created. Consequently, the employer asserted that because there was no period of time when the respondent employees were without employment, such circumstances should reasonably permit the non-payment of any redundancy related benefit. The employer sought an Order varying the amount of redundancy pay to nil, or in the alternative, an amount determined by the Commission.
The Case for the 1st Respondent Employee
[32] The CEPU provided a written outline of submissions document on behalf of the 1st respondent employee, Mr Corcoran. The submissions made on behalf of Mr Corcoran opposed the application to vary the redundancy pay that he would otherwise be entitled to receive. In broad terms, the application was opposed on the basis that, firstly, the employer had not obtained the alternative employment, secondly, the alternative employment was not acceptable alternative employment, and, thirdly, as a matter of the exercise of discretion, the Commission should not reduce Mr Corcoran’s redundancy pay.
[33] The CEPU submissions firstly identified what was asserted to be an absence of a jurisdictional fact which was said to be a prerequisite for the Commission exercising the discretion under s. 120 of the Act to vary an amount payable for redundancy. According to the submissions made by the CEPU, no variation could be made under s. 120 of the Act because the entitlement to redundancy pay for Mr Corcoran (and the other respondent employees) was not an entitlement that existed because of s. 119. The CEPU submitted that although the EA had passed its nominal expiry date, it had not been terminated and did not cease to operate under s. 58 unless and until a later enterprise agreement came into operation. Therefore, according to the submissions of the CEPU, the jurisdictional fact identified at section 120 (1) (a) of the Act had not been made out, and the application must consequently fail.
[34] The further submissions made by the CEPU asserted that the evidence did not provide basis to establish that the employer had obtained Mr Corcoran’s current employment with ETS. In this regard, it was asserted that Mr Corcoran made his own application for the role he subsequently secured with ETS via the SEEK website and that the process that was engaged effectively required candidates including the respondent employees, to compete for the positions that were being offered by ETS. These submissions stressed that the evidence did not provide for a finding that Savco had secured the offers of jobs for its staff with ETS.
[35] The CEPU also submitted that the alternative employment offered to and accepted by inter alia, the 1st respondent employee, Mr Corcoran, was not acceptable employment. These submissions acknowledged that the assessment of whether other employment was acceptable involved an objective analysis of the terms and conditions of the new employment against the purposes of redundancy pay which it is said to offset. The submissions of the CEPU referred to evidence provided by Mr Corcoran that the terms of his employment with ETS were less beneficial than the terms and conditions of his employment with Savco. In this regard, it was submitted that Mr Corcoran was paid $5.17 per hour less than what he received when working for Savco, he had been engaged on a six-month probation period, and his work location and rostering arrangements had changed significantly to his detriment. It was submitted that in view of these impacts, Mr Corcoran’s employment with ETS could not be objectively found to be other acceptable employment.
[36] The submissions of the CEPU concluded by asserting that if the Commission was properly seized of the relevant jurisdictional facts to enable a variation of the redundancy pay to which Mr Corcoran would otherwise be entitled, as a matter of discretion, given the adverse impacts identified in respect of Mr Corcoran’s redundancy and the new employment that he has with ETS, no reduction should be made to his redundancy payment.
Consideration
[37] In this instance, the application made by the employer to have the Commission make a determination to reduce the redundancy pay which the respondent employees were entitled to receive under s. 119 of the Act, was advanced on the basis that the employer had obtained other acceptable employment for inter alia, the 1st respondent employee, Mr Corcoran. Consequently, the matter for determination by the Commission has primarily involved the question as to whether the employer had obtained other acceptable employment for Mr Corcoran. However, the evidence that has been provided has disclosed that the application also raised a potential jurisdictional impediment.
[38] Obtaining other acceptable employment is one basis for variation of redundancy pay provided for in s. 120 of the Act. Section 120 of the Act is in the following terms:
“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.”
[39] The application in this instance has been made on the basis that there is satisfaction of subsection 120 (1) (b) (i) of the Act. In this regard, the onus is on the employer to prove that it obtained other acceptable employment for the employee, who is, in this case, the 1st but apparently only remaining respondent employee, Mr Corcoran. However, any application made under s. 120 of the Act must relate to redundancy pay to which the employee is entitled to under s. 119 of the Act.
[40] The uncontested position that was revealed in this matter has confirmed that the employer was covered by the EA which had passed its nominal expiry date but had not been terminated or replaced by a later enterprise agreement. Therefore, the combined operation of ss. 53, 54 and 58 of the Act has meant that the EA has continued to operate, albeit past its nominal expiry date, and it covers and applies to the employer and the respondent employees.
[41] Clause 2.7 of the EA is titled “Redundancy” and subclause 2.7.5 provides for severance pay and includes a table of relevant amounts of severance pay entitlements in respect of stipulated periods of continuous service. Consequently, the severance payment entitlements of the respondent employees including the 1st respondent employee, Mr Corcoran, are derived from the EA, and specifically the amount to be paid is stipulated by subclause 2.7.5 of the EA. Therefore, the legislative prerequisite for any application made under s. 120 of the Act, namely, that an employee is entitled to be paid an amount of redundancy pay by the employer because of section 119, is absent in this case.
[42] The application taken under s. 120 of the Act is without jurisdictional foundation as the entitlement to be paid redundancy to the respondent employees was not because of s.119 but instead, was an entitlement provided by the terms of the EA. Consequently, the application is without jurisdictional foundation and it must be dismissed.
[43] Although the application in this case must be dismissed because it is without jurisdictional foundation, it is appropriate to recognise that subclause 2.7.8 of the EA provided a mechanism for the Commission to amend the amount of redundancy payable under subclause 2.7.5 if the employer obtains acceptable alternative employment for an employee. Consequently, in order to avoid the prospects of further litigation initiated via the terms of the EA rather than s. 120 of the Act, the Commission will provide a determination of the primary question regarding whether the employer had obtained acceptable alternative employment for the 1st respondent employee, Mr Corcoran.
[44] The first aspect of consideration of this question has involved an examination of the evidence about whether a finding could be made that the employment that Mr Corcoran secured with ETS was obtained by the employer. In this regard, the employer has asserted that it was a strong moving force towards the creation of the available opportunity for Mr Corcoran to be hired by ETS. Mr Corcoran has asserted that he secured the employment with ETS through his own efforts of answering the SEEK advertisement, and following a competitive interview process, being the successful candidate.
[45] The evidence has not supported any finding that the actions of the employer operated as the primary means by which the alternative employment of Mr Corcoran with ETS was secured. It is relevant to note that following the outcome of the tender for the Essential Energy contract, the initial contact between the employer and ETS was initiated by ETS. Further, the evidence that was provided by ETS did not confirm that the employer negotiated and secured assurances from ETS regarding the employment of inter alia, Mr Corcoran. The evidence provided by the NSW ETS General Manager was to the effect that an arrangement had been established between the employer and ETS that would “…provide a path for the Savco workers to potential [sic] join ETS following a competitive recruitment process.” 3
[46] A consideration of the totality of the evidence surrounding the activities of the employer regarding the transition of employment from Savco to ETS has confirmed what was actually stated in further evidence from ETS that “The approach being applied [was] to encourage and facilitate a possible movement of workers from Savco to ETS.” 4 The facilitation and assistance for a potential of employment falls far short of any satisfaction that the employer had obtained other acceptable employment.
[47] The second component for consideration has involved the question of whether the other (alternative) employment could be objectively determined to be acceptable. The evidence in this instance has established that contrary to the submissions made on behalf of the employer, there were a number of significant detriments for Mr Corcoran in respect of the terms and conditions of employment with ETS. These detriments included; a $5.17 lower hourly rate of pay; less attractive work location and rostering arrangements; introduction of a six-month probationary period; and the loss of various non-transferable employment credits derived from length of service.
[48] On any reasonable and objective assessment, the employment that Mr Corcoran obtained with ETS could not be established as acceptable. The employment with ETS, when compared with the terms and conditions of the employment with the employer and having regard for the losses associated with the termination of employment, was not other acceptable employment.
[49] In summary, the evidence and submissions provided by the employer has not established that it obtained other acceptable employment for the 1st respondent employee, Mr Corcoran. The evidence has established that the employer provided only assistance and facilitation for a potential for other employment, and that the other employment that was obtained was objectively, not acceptable other employment.
[50] In conclusion, the employer has not established that it obtained other acceptable employment for the 1st respondent employee, Mr Corcoran. Therefore, the application has not satisfied the requirements of subsection 120 (1) (b) (i) of the Act. In any event, the application was without jurisdictional foundation because the redundancy entitlement of inter alia, the 1st respondent employee was not derived from s. 119 of the Act, but instead, was an entitlement arising from the terms of an enterprise agreement.
[51] The application has not satisfied the requirements of subsection 120 (1) (b) (i) of the Act and in any event, it was without jurisdictional foundation and must be dismissed accordingly. An Order dismissing the application will be issued separately.
COMMISSIONER
Printed by authority of the Commonwealth Government Printer
<PR735371>
1 Witness Statement of Anthony “Bill” Savige dated 17 August 2021, @ paragraph 5.
2 Witness Statement of Peter Kemp dated 17 August 2021, @ paragraph 7.
3 Witness Statement of Brett Sills dated 17 August 2021, @ paragraph 3.
4 Witness Statement of Brett Sills dated 17 August 2021, @ paragraph 6 c.
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