Scooter Q P/L T/A Red Rooster Wynnum v Mr Greg Costello

[2016] FWC 7563

[2016] FWC 7563

FAIR WORK COMMISSION

DECISION

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

Scooter Q P/L T/A Red Rooster Wynnum
v
Mr Greg Costello
(C2016/5322)

COMMISSIONER SPENCER BRISBANE, 9 NOVEMBER 2016

Variation of redundancy pay.

[1] This Decision relates to an application made under s.120 of the Fair Work Act 2009 (Cth) (the Act) for a variation to redundancy pay. The application has been made by Scooter Q P/L T/A Red Rooster Wynnum (the Applicant).

[2] The Applicant has applied to the Fair Work Commission (the Commission) seeking to have the redundancy entitlement of Mr Greg Costello (the Respondent) reduced to nil. In the Form 54A - Application to vary redundancy pay filed by the Applicant, the Applicant stated that the Respondent had been employed on a part-time basis with the Applicant for 2 years and 3 months, and is entitled to 6 weeks redundancy pay. The Respondent worked approximately 9 hours per week at a rate of $14.46/hour. An entitlement to 6 weeks redundancy gives the amount of redundancy pay, which is sought to be varied, of $780.84 (less any applicable tax).

[3] The Applicant has made this application pursuant to s.120(1)(b)(i) of the Act, on the basis that the Applicant submitted that it had obtained other acceptable employment for the Respondent.

[4] The Applicant operates two Red Rooster outlets in Queensland; one at Wynnum West and one at Moorooka. The Respondent worked at the Applicant’s Wynnum outlet, which was sold to new owners and the Respondent’s job was made redundant. The Applicant submitted that it offered the Respondent a part-time job on the same conditions and rate of pay at the Applicant’s Moorooka outlet. However, the position was not expressly stated nor the number of hours, in the material provided; there was only a reference to the same conditions and rate of pay being offered. This offer was declined by the Respondent. The Applicant submitted that the Respondent was also offered a casual position at the Wynnum outlet (working for the new owners) which was also declined. The Applicant submitted that the remuneration and conditions for the two alternative jobs were the same as the Respondent’s redundant job at the Applicant’s Wynnum restaurant.

[5] Directions were issued for the filing of materials. Both parties filed materials and indicated they agreed the matter be determined on the papers.

Relevant legislation and award clauses

[6] The National Employment Standards (NES) prescribe the minimum entitlements to redundancy pay pursuant to s.119 of the Act:

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

[7] The application has been made pursuant to s.120(1)(b)(i) of the Act which provides:

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…

(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.

[8] The following was set out in Directions:

“Whilst it is acknowledged that information has been provided in the application, both parties are required to address in detail the following:

● whether the Applicant was entitled to be paid redundancy pay, in accordance with s.119 of the Act;
● the remuneration and conditions of the alternative employment found, including also its location, hours of employment and duties (in comparison to the former position);
● whether the alternative employment was obtained by the Employer; and
● whether the alternative employment was or was not, acceptable, and why.”

Summary of the Applicant’s Submissions

[9] The Applicant submitted that it had obtained other acceptable employment for the Respondent in the form of jobs at both the Wynnum and Moorooka Red Rooster outlets and therefore the Respondent’s redundancy pay should be reduced to nil.

[10] The Applicant submitted that the new owners of the Wynnum outlet, MIT Foods,had expressed that they may not require all of the staff currently employed at the outlet, due to uncertainty around the sales and delivery schedule and the Respondent was therefore offered a casual position working for the new owners at the Wynnum store, which was declined by the Respondent.

[11] The Applicant submitted that it offered the Respondent a position at its Moorooka outlet, which was also declined by the Respondent. The Applicant submitted that the reason given by the Respondent for not accepting the alternative position at Moorooka was because he considered the travel time to work of 20-25 minutes was excessive.

[12] The Application submitted that the ordinary hourly rate of pay the Respondent received in his redundant job was $14.46 per hour. The Applicant submitted that the redundant position and the other positions offered to the Respondent attracted the same rate of pay and conditions.

[13] The Applicant submitted that three other employees who were offered jobs at the Moorooka outlet accepted such and that one accepted a casual position at the Wynnum store, with the option to work at Moorooka, remaining open for that employee.

[14] The Applicant submitted that the Respondent had previously worked at the Moorooka outlet without complaint.

Summary of the Respondent’s Submissions

[15] The Respondent submitted that he was employed on a part-time contract by the Applicant at their Wynnum Red Rooster outlet. The Respondent stated that he worked 9 hours a week, and was paid an hourly rate of $14.46 and was covered by the Fast Food Industry Award 2010 1. The Respondent stated that he would normally work between 2 to 3 shifts per week, and earn approximately $220.00 per week. The Respondent submitted that he was originally employed to work at the Wynnum outlet, and that when he was first employed by the Applicant, the Applicant did not own the Moorooka outlet.

[16] The Respondent stated that, on 8 September 2016, his mother attended a meeting with him as his witness, and that during the meeting the Respondent mentioned to the Applicant that he had only agreed to work at the Moorooka outlet as a favour to the Applicant to which the Applicant’s wife stated “yes you did help us out Greg and thank you”. The Respondent stated that during this meeting with the Applicant, he felt that he was being pushed by the Applicant as to why he would not accept the position at the Moorooka outlet.

Position at Wynnum outlet

[17] The Respondent submitted that the status of his position, with the Applicant at the Wynnum outlet was to change from part-time to casual employment with the new owners. The Respondent stated that the casual position did not offer him job security, and if he did accept the offer of the casual position, the new owners of the Wynnum outlet could heavily reduce his working hours or reduce them to nil because the casual position did not have a minimum number of hours a week. The Respondent stated that the casual position was obtained or offered by the new owners of the Wynnum outlet, and not the Applicant.

[18] The Respondent submitted that accepting the casual job at the Wynnum store was ‘risky’ as he considered the new owners only wanted to keep junior staff. The Respondent included a text message from Mr Paul Green, of the Applicant, in his material as follows:

“Greg I was trying to call you yesterday we have received confirmation that wynnum will be handed over to new owners next Monday at this stage they have indicated that only the juniors are staying quite a few including I now have to give notice to I can attempt to fit you in at moorooka for some shifts if you want that’s your call Monday 12 th is handover day to which your notice takes effect as you need 2 weeks notice you will be paid the extra shifts that you would do week commencing 12 th cheers paul”

[19] The Respondent submitted a text message in reply as follows, and submitted that he thought that the Applicant was offering extra shifts at Moorooka, and that he was not replying to a job offer:

“Hi Paul, thanks for the notice, I should be okay without the Moorooka shifts but thank you for the offer, I’ll see you at tomorrow’s meeting.”

[20] The Respondent submitted that if he did accept the offer of the casual position at the Wynnum outlet, he would lose his rights to redundancy payment and would not have enough money to cover his expenses. The Respondent also stated that the casual position would not entitle him to sick leave and annual leave.

[21] The Respondent submitted that the casual position offered by the new owners was at the same location as his redundant job; being the Wynnum outlet, and his duties would remain the same. The Respondent stated that while the rate of pay would be higher in the casual position, it did not offer him job security. The Respondent submitted that it was for these reasons that he did not regard the alternative employment at the Wynnum outlet as acceptable.

Position at the Moorooka outlet

[22] The Respondent stated that the status of his position would remain the same if he did accept the part-time position at the Moorooka outlet. The Respondent submitted that the rate of pay and hours of employment would also remain the same; however the duties may vary slightly.

[23] The Respondent submitted that a major factor in the alternative employment offered to him at the Moorooka outlet was its location. The Respondent stated that it would take him approximately 35-40 minutes to travel by car, in good traffic conditions, from his house to the Moorooka outlet. The Respondent stated that he did not agree with the submission of the Applicant, that it would take 20-25 minutes. The Respondent stated that the start time of his shifts are usually between 4:00pm-5:30pm which means he has to travel through peak hour traffic, which would add additional time onto his travel to the Moorooka outlet.

[24] The Respondent stated that he did not own a car, and the car that he sometimes used to drive to work at the Wynnum outlet is his father’s car. The Respondent stated that his father often requires the use of his car, which would leave him without a means to travel to work. The Respondent stated that when he does use his father’s car, he has to pay for the petrol he uses. The Respondent stated that if his father did need his car on short notice he would come down to the Wynnum outlet and collect it, and the Respondent would walk home.

[25] The Respondent submitted that if he was to work at the Moorooka outlet, his father would not have access to his car on short notice, and the Respondent would have to catch public transport. The Respondent stated that in the event that he is not able to use his father’s car to travel to work, it would take him 1 hours and 15 minutes by public transport to travel to work at the Moorooka outlet (2.5 hours in total return). The Respondent stated that he lives in Wynnum, and it is a 5 minute drive from his house to the Wynnum outlet, or a 15 minute walk. The Respondent stated that as he is a university student and time poor, the alternative employment at the Moorooka store was not acceptable, given that he only worked 9 hours a week on a very small wage.

[26] The Respondent submitted that the additional use of his father’s car would mean that there would be additional costs associated with the maintenance of the car, and would cause extra mileage on his father’s car. The Respondent noted that he did not raise these issues with the Applicant at the meeting on 8 September 2016.

[27] The Respondent stated that he has not been reimbursed for his travel time from the Applicant for the previous times that he worked at the Moorooka outlet, and he was entitled to travel allowance.

[28] The Respondent refuted the Applicant’s submission that he worked at the Moorooka outlet without complaint. The Respondent stated that he had only worked at the Moorooka store approximately five times, which he did as a favour for the Applicant.

[29] The Respondent submitted that the Applicant did not obtain acceptable alternative employment for him. The Respondent stated that the Applicant offed him a part-time position at the Moorooka Red Rooster outlet, and the new owners of the Wynnum outlet offered him the casual position.

Summary of the Applicant’s material in reply

[30] In relation to the text messages provided by the Respondent, the Applicant submitted that while he indicated that the new owner of the Wynnum outlet were only retaining junior staff, it turned out that this was not the case, and it was only an indication as they did not know the staff.

[31] Further, the Applicant submitted that he said he could fit the Respondent in at Moorooka as a figure of speech and that in his mind, this was a job offer.

[32] The Applicant submitted that the staff from Wynnum that now work at Moorooka all state that 25 minutes is generally the travel time.

[33] The Applicant submitted that the staff who moved to Moorooka have not been, nor will they be given, shorter shifts. The Applicant stated that they now get longer shifts to suit their availability and that the Respondent never gave the Applicant the opportunity to discuss this with him, unlike the other staff.

[34] The Applicant submitted that he was still of the opinion that he attempted in good faith to find and offer the Respondent alternative employment as with all staff affected by the changeover, and added that the Respondent was the only staff member not to accept a position at Wynnum and or at the Moorooka outlet. 

Consideration

[35] An application pursuant to s.120 has multiple elements, of which the Commission must be satisfied, prior to issuing an Order.

[36] Firstly, the wording of the section requires that an entitlement to redundancy pay must exist, in order for the Commission to vary that redundancy pay entitlement. The Commission has previously held that in order for s.120 of the Act to have any application, there must first be an entitlement to redundancy pay pursuant to s.119 of the Act. 2 Further, it was held that where there is no entitlement under s.119, there can be no order to reduce the “entitlement” pursuant to s.120.3

[37] Employees are entitled to redundancy pay pursuant to the provisions of the Act. Section 119 relevantly provides that an employee is entitled to be paid redundancy pay by the employer, if the employee’s employment is terminated 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.

[38] Both parties accept, and I am satisfied, that the Respondent has an entitlement to redundancy pay, pursuant to s.119 of the Act, subject to any order that the Commission may make. Relevantly, what must be considered is whether the Applicant obtained other acceptable employment for the Respondent.

[39] A Full Bench of the Commission in The Maritime Union of Australia v FBIS International Protective Services (Aust) Pty Ltd 4 summarised the case authority in relation to whether other acceptable employment had been “obtained”, as follows:

“[42] The question of what is required by the word “obtains” was considered by the Full Bench in Derole Nominees. It found:

“The word ‘obtains’ does not appear in its context to mean actually obtain in the fullest sense possible. In circumstances like those occurring at the company one employer is incapable in law of effecting a contract of employment between his employee and another employer whether by assignment or otherwise; the creation of the legal relationship of master and servant depends on a mutuality being arrived at between the individual and the incoming employer. Therefore, the pursuit of alternative employment by the outgoing employer cannot be expected, by reason of itself alone, to produce new employment; there will usually and perhaps always remain the opportunity for the incoming employer, and the employee, to disagree as to matters such as terms of employment, suitability of the job to the employee and vice versa so that alternative employment may not eventuate.

It follows that ‘obtain’ must be given some lesser meaning. The Shorter Oxford Dictionary (3rd ed revised) provides as its relevant meaning, the definition of ‘obtain’ as ‘to procure or gain, as the result of purpose and effort’. It seems to us that meaning is of assistance here; that is, the employer by purpose and effort may establish an opportunity which suits the employee and which crystallises as alternative employment of an acceptable kind.” 5 [citations removed]

And

“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.” 6

[43] In 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. 7

[44] In Allman v Teletech International Pty Ltd, 8 Marshall J considered whether Teletech International Pty Ltd (Teletech) had been “able to arrange alternative employment” which appeared in provisions for relief from the obligation to pay redundancy payments within relevant workplace agreement, upon its employees being offered employment by Telstra upon taking over a contract formally held by Teletech. His Honour considered the Full Bench decision in Derole Nominees, finding that “[t]here is no material difference between obtaining alternative employment and being able to arrange it.”9

[45] Justice Marshall found that Teletech assisted its employees to apply for jobs with Telstra, had active involvement in the transition of the employees to work with Telstra, met with Telstra to discuss the possible employment of the employees by Telstra and secured a commitment from Telstra that Telstra would give all redundant Teletech employees the opportunity to apply for employment with Telstra. He found:

“Teletech was not, however, a strong moving force towards the creation of the available opportunity. The available opportunity arose because Telstra was to perform functions formerly performed for it by Teletech. Telstra required staff. It made sense for it to approach Teletech staff. Teletech did not secure the offer of a job for Teletech staff with Telstra. As counsel for the applicants submitted, Teletech arranged an opportunity for the employee applicants to participate in a recruitment process undertaken by Telstra.” 10

[46] Whilst accepting that Teletech brought the employees and Telstra together and that Teletech’s conduct was one of the factors that brought about the employment, Justice Marshall found that it did not mean that Teletech was able to arrange the employment, finding that Teletech facilitated its staff applying for jobs with Telstra, competing on their merits for the available positions. 11 His Honour found that:

“The encouragement and facilitation of a process is not the same as doing everything possible to ensure a result. Arranging alternative employment means bringing about that employment should the employee choose to accept it. Anything short of that, such as competing with competitor applicants (albeit limited to two categories of applicant: existing Telstra and Teletech employees) does not meet the test provided by the relevant sub-clause in the AWAs.” 12”

[40] There was no evidence on the material provided that the Applicant recommended the Respondent for a position with the new owner or otherwise facilitated the offer of casual employment with the new owners at the Wynnum outlet. There was limited information provided to the Commission as to how the offer of employment with the new owners was made to the Respondent and the Applicant has not satisfied the Commission that they were “a strong moving force towards the creation of the available opportunity” 13. It is accepted that while the Applicant may have brought the parties together, there was no evidence that the Applicant brought about the employment offer14.

[41] With respect to the Moorooka position, this was offered to the Respondent by the Applicant and was obtained for the Respondent by the Applicant. The differences in the employment conditions between the redundant job and those alternative positions offered to the Respondent must be considered in relation to whether the other employment was “acceptable”.

[42] In the matter of Australian Chamber of Manufacturers v Derole Nominees Pty Ltd 15, the Full Bench stated as follows:

“What constitutes “acceptable alternative employment” is a matter to be determined, as we have said, on an objective basis. Alternative employment accepted by the employee (and its corollary, alternative employment acceptable to the employee) cannot be an appropriate application of the words because that meaning would give an employee an unreasonable and uncontrollable opportunity to reject the new employment in order to receive redundancy pay; the exemption provision would be without practical effect.

Yet, the use of the qualification “acceptable” is a clear indication that it is not any employment which complies but that which meets the relevant standard. In our opinion there are obvious elements of such a standard including the work being of a like nature, the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.” 16

[43] In Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd 17, the Full Bench in considering acceptable alternative employment stated:

“...We do not propose to repeat here the thoroughly detailed argument presented by counsel for the union. A considerable part of that case was devoted to questions of onus and to supporting the proposition that the test of acceptability of the alternative employment is an objective one involving a consideration of such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and other matters. It was argued that the failure of the employer to adduce evidence of such matters caused the company to fail to make out a case for an exemption. We have no doubt that there is an onus on the employer invoking cl 51(c) and that matters of the kind referred to by the union may be relevant in assessing the position in a particular case. We do not believe it to be necessary to make that examination in every case. Where an employee has accepted alternative employment in circumstances as those here, then in the absence of positive evidence going to the unacceptability of that employment, including unacceptable features of it, then the Commission is entitled to hold the employment as an acceptable alternative and relieve the employer of the obligation under cl 51(c) of the award...” 18

[44] At the time the Respondent was made redundant, he was working for the Applicant on a part-time basis, where he worked a minimum of 9 hours per week at an hourly rate of pay of $14.46. The Applicant submitted that the Respondent’s hours of work were generally between the hours of 5:00pm – 10:00pm or 5:30pm – 10:30pm. The Respondent had previously worked shifts at the Applicant’s Moorooka outlet, however, the Respondent stated that this was done as a favour to the Applicant and only happened approximately 5 times over the course of the Respondent’s employment with the Applicant.

[45] In terms of the alternative employment offered by the new owners of the Wynnum outlet, the material difference was the change in the Respondent’s status from part-time to casual. It was on this basis that the Respondent rejected the offer, as it provided less job security, and while providing a higher rate of pay, would result in no annual leave or sick leave accruals. This alternative casual position, therefore, was not on commensurate terms with the prior position. With respect to the position at Wynnum, the Applicant has not demonstrated that they obtained other employment nor did they satisfy that the terms of the other employment were acceptable (pursuant to s.120(b)(i) of the Act), to warrant a reduction in redundancy pay.

[46] However, the Applicant did obtain the alternative part-time position at the Moorooka outlet for the Respondent on the same rate of pay and hours of work per week. The material difference, on the evidence provided, was that it would require the Respondent to travel to and from work, at a distance that the Respondent deemed unacceptable. The Applicant submitted that it would only take approximately 25 minutes to travel one way, while the Respondent submitted it would take 35 minutes in good traffic conditions. The Respondent provided reasons why the requirement to travel by car would affect him particularly and submitted that the travel time by public transport was excessive given the number of hours he worked per week at a small wage. Given these circumstances, whilst the Commission is satisfied that the Applicant obtained alternative employment for the Respondent with the position at the Moorooka outlet, the increase in travel time for the Respondent does not satisfy the Commission that the alternative employment was acceptable to the extent required to obviate the Applicant’s total obligation to pay redundancy.

Conclusion

[47] Accordingly, for the aforementioned reasons, taking into account all of the circumstances, I am satisfied that, in accordance with s.120 (1)(b)(i) of the Act, the discretion pursuant to s.120(2) of the Act should be exercised, to reduce the amount of redundancy pay, on the basis that other employment was ‘obtained’ for the Respondent by the Applicant (as per the case law) with the part-time position at the Moorooka outlet, but the resultant position provided lesser terms with the increase in travel time.

[48] The Respondent has an entitlement to 6 weeks redundancy pay for between 2 and 3 years of service. The discretion is therefore exercised pursuant to s.120(2) to reduce the amount to four (4) weeks redundancy payment (based on a 9 hour week at the base rate of pay at the date the redundancy was effected by the Applicant). This amount, less the appropriate tax, is payable within 14 days from the date of this Decision.

[49] An Order reflecting the terms of this Decision will issue separately

COMMISSIONER

 1   MA000003.

 2   Application by CAE Australia Pty Ltd [2012] FWA 7992 per Watson VP at [13].

 3   Ibid; also refer M & S Dickson [2011] FWA 5206 per Lewin C.

 4   [2014] FWCFB 6737.

 5 (1990) 140 IR 123, at 127.

 6 (1990) 140 IR 123, at 128.

 7   [2013] FWC 1327, at para 12.

 8 [2008] 178 IR 415.

 9 [2008] 178 IR 415, at 418.

 10 [2008] 178 IR 415, at 419.

 11 [2008] 178 IR 415, at 419.

 12 [2008] 178 IR 415, at 419.

 13 (1990) 140 IR 123, at 128.

 14 [2008] 178 IR 415, at 419.

 15 (1990) 140 IR 123.

 16 (1990) 140 IR 123 at pp128.

 17 (1988) 27 IR 226.

 18 (1988) 27 IR 226 at pp230 - 231.

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