Seaway HCO Pty Ltd

[2021] FWC 3593

[2021] FWC 3593

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Seaway HCO Pty Ltd
(C2021/3011)

DEPUTY PRESIDENT CLANCY MELBOURNE, 22 JUNE 2021

Application for variation of redundancy pay – not satisfied the applicant obtained other acceptable employment for the employee – application dismissed.

[1] On 28 May 2021, Seaway HCO Pty Ltd (Seaway) applied for an order under s.120 of the Fair Work Act 2009 (the Act) to reduce the redundancy entitlement of Mr Kyung Woo Kim. The application is made on the basis that Seaway obtained other acceptable employment for Mr Kim, which he accepted.

[2] Mr Kim worked at Seaway from 1 June 2018 to 31 May 2021 and is entitled under s.119 of the Act to seven weeks’ redundancy pay. Seaway has applied to reduce that amount to zero.

[3] Mr Kim opposes the application and asserts Seaway has not obtained other acceptable employment for him.

Background

[4] Mr Kim commenced employment with Seaway on 1 June 2018. With effect from 29 July 2019, he was appointed Warehouse Operations Manager – Hankook on an annual salary of $72,000.00. Mr Kim’s ordinary hours of work totalled 37.5 hours per week.

[5] Mr Kim was employed at the Hankook VIC warehouse as a result of the following commercial arrangements:

•  Samsung SDS (Samsung) is a logistics provider to Hankook Australia (Hankook) and operates a warehouse for Hankook which is referred to as the Hankook VIC warehouse.

•  In 2018, Samsung awarded Seaway a 3-year contract to manage the operation of the Hankook VIC warehouse on its behalf.

•  So as to be able to fulfil its contractual obligations, Seaway employed 5 staff members, including Mr Kim, to work at the Hankook VIC warehouse.

[6] Commencing in December 2020, there were negotiations between Seaway and Samsung regarding their contract. Seaway sought revised rates for a new contractual term. Its proposal was rejected by Samsung. Following this, the parties navigated the process of Seaway handing back the work it had been performing at the Hankook VIC warehouse. This process was completed, such that from 1 June 2021, Samsung resumed the management of the Hankook VIC warehouse. Part of the handover process involved dialogue between Mr Jaye Kurts of Seaway and Mr Junghee Park of Samsung regarding the 5 Seaway staff members, including Mr Kim, who had been working for Seaway at the Hankook VIC warehouse. The dialogue included:

•  Mr Kurts conveying on 6 May 2021 a recommendation to Seaway that all Seaway staff transfer to Samsung on their current rates of pay, with Seaway making payment to Samsung in relation to their leave entitlements.

•  Mr Park replying on the same day and stating that a transfer of the Seaway staff to Samsung would not be possible and further, that going forward only 4 staff would be required in the Hankook VIC warehouse.

•  Mr Park nominating the 4 members of Seaway’s staff that Samsung proposed “to takeover”, Mr Kurts requesting that they be provided with Samsung letters of offer and Mr Park promising letters of offer would be provided to the 4 Seaway employees by the week ending Friday 21 May 2021.

•  By email at 8.40am on 21 May 2021, Mr Park advising Mr Kurts “the staff transfer from Seaway to SDS (Samsung) for those who we have decided to take shall be finalised from our end by today, some has already accepted our offer.”

•  Mr Kurts replying at 3.45pm on 21 May 2021 “We will be sitting down with staff on Monday to issue then their termination of employment under the provision that SDSAU (Samsung) has received written acceptance from all 4 employees that are transferring.”

•  Mr Kurts following up on Monday 24 May 2021, “just need to get confirmation that all 4 staff have now accepted roles with SDSUA. If you or your HR can reply confirm officially outlining staff members name and date of acceptance that would be appreciated” and Mr Park replying that all 4 staff would be accepting the offer by the end of the day, whereupon he would confirm by SMS.

•  Mr Kurts’ further follow up on Wednesday 26 May 2021 “I would think their contracts would be a priority for SDSAU. I believe that you are running the risk of losing staff by delaying their contracts. Seaway cannot issue termination until we can understand their decisions with Samsung.”

•  A reply from Mr Park stating that Samsung’s “agents” had sent “official” offers to the 4 staff and was in the process of finalising paperwork with the expectation being that “execution” would be completed by Friday 28 May 2021.

[7] It would appear that as much as Mr Kurts knew by Friday 28 May was via verbal communication. It would seem he was told that the 4 Seaway staff had received letters of offer but he did not know, at that time, whether or not they had accepted their offers. A colleague of Mr Kurts, Mr Rohan Mitchell, stated that Mr Kim advised him that he had received a verbal offer of employment from Samsung but had not received a final, written version.

[8] Mr Kim said the initial contact made with him was from Samsung but when he received the contract document, it was apparent he was going to be employed by another entity. Mr Kim produced to the Commission a document entitled “Notice of Employment offered – Casual Summary of Assignment Conditions (SAC)”. It outlines:

•  The employer is dh Appointments Australia Pty Ltd, dh Appointments QLD Pty Ltd, dh Appointments VIC Pty Ltd, dh Appointments NSW Pty Ltd, dh Appointments SA Pty Ltd T/A Driver Hire Australia/dh Australia (dh Appointments).

•  The “client” is Samsung at the Hankook VIC warehouse.

•  The employment status was Casual.

•  The position was Warehouse Supervisor.

•  The Storage Services and Wholesale Award 2020 was to apply.

•  The ordinary time rate of pay was $41.03 per hour which was inclusive of a “DH bonus” payable upon the fulfilment of certain conditions, failing which the Award rates would apply. 1

[9] Mr Kim gave evidence that his role and workload at dh Appointments is “pretty much the same” as the role and workload he had while working for Seaway at the Hankook VIC warehouse. He said that he reports to a manager who works at another site and that this was the same dynamic that existed when he worked for Seaway at the Hankook VIC warehouse. Mr Kim also said that whereas there were 8 employees in the warehouse when he was working for Seaway, there are now 6. Further, Mr Kim said that his hours of work are the same; 37.5 per week with a 30-minute unpaid break each day. Mr Kim said that had he known in advance the job on offer would be casual, he would have looked for alternative, full-time work instead.

[10] Seaway said that it knew that staff would continue to be required to operate the Hankook VIC warehouse and submits it tried to obtain ongoing employment for its employees. It says that until the last minute, it was led to believe its employees would be offered permanent employment by Samsung and was not aware that dh Appointments would be involved.

Legislation

[11] Section 119 of the Act provides a statutory right to redundancy pay in amounts calculated based on an employee’s continuous service with the employer.

[12] Section 120 of the Act provides as follows:

“(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.”

Consideration

[13] In applications such as these, the onus lies on the employer company seeking the exemption from redundancy payment obligations and the discretion exists for the Commission to make an order to reduce or remove an employee’s statutory entitlement to redundancy pay.

[14] The Full Bench of the Commission in Australian Commercial Catering Pty Ltd v Powell and Togia; Powell v Australian Commercial Catering Pty Ltd 2 outlines the approach that I intend to follow in considering Seaway’s application to reduce Mr Kim’s redundancy pay:

“[35] In considering an application made by an employer under s.120, the Commission must first consider whether either of the circumstances set out in paragraphs (a) or (b) of s.120(1) applies. Consideration under s.120 is enlivened upon an application being made by the employer for a reduction in the amount of redundancy pay otherwise payable under s.119. In dealing with such an application, the Commission must first determine whether the pre-conditions for the application of the section set out in s.120(1) are satisfied - that is, that the employee the subject of the application has an entitlement under s.119 to redundancy pay, and that the employer has either obtained other acceptable employment for the employee or cannot pay the redundancy entitlement.

[36] As was pointed out in the Full Court decision, “The origin of s 120 lies in the decision of the Full Bench of the Conciliation and Arbitration Commission in Termination, Change and Redundancy Case (1984) 8 IR 34 to introduce an entitlement to severance pay for all employees under federal awards whose employment had been terminated because of redundancy”. 3 Cases decided in relation to award provisions established pursuant to those test case provisions are therefore relevant in the consideration of s.120.

[37] In relation to s.120(1)(b)(i), whether alternative employment obtained by the employer is “acceptable” is to be determined objectively, not by reference to whether the employment is subjectively acceptable to the employee. 4 The determination of whether alternative employment is acceptable requires an assessment and value judgment on the part of the decision-maker.5 The employer “obtains” other acceptable employment when it acquires or gets the employment by its conscious, intended acts.6

[38] Once it is concluded that the preconditions in s.120(1) are satisfied so that s.120 is applicable, it will be necessary for the Commission to determine under s.120(2) whether the employee’s entitlement to redundancy pay under s.119 should be reduced and, if so, by how much. This requires the exercise of a broad discretionary power. 7 Any determination by the Commission for a reduced amount of redundancy pay then becomes the employee’s entitlement under s.119: s.120(3).”

Section 119(1)(a) of the Act

[15] There is no dispute that Mr Kim’s position with Seaway is redundant and therefore, he would ordinarily be entitled to redundancy pay pursuant to s.119(1) of the Act. His employment was terminated by Seaway because it no longer required the Warehouse Operations Manager - Hankook role performed by Mr Kim to be done by anyone.

Section 120(1)(b)(i) of the Act

[16] As to whether Seaway obtained other acceptable employment for Mr Kim, I am not satisfied Seaway acquired or “got” the employment for Mr Kim with dh Appointments by its conscious, intended acts. True it is that Seaway made representations to Samsung on behalf of Mr Kim and his colleagues at the Hankook VIC warehouse, however it had no contact or involvement with dh Appointments, the eventual new employer of Mr Kim.

[17] Even if I was satisfied Seaway had obtained other acceptable employment for Mr Kim, I would not be satisfied it constitutes “other acceptable employment”. Whether alternative employment is “acceptable”, is to be determined objectively. In Clothing & Allied Trades Union of Australia v Hot Tuna Pty Ltd, the Full Bench of the Australian Conciliation and Arbitration Commission stated:

“…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.” 8

[18] Having regard to the evidence of Mr Kim and the document entitled “Notice of Employment offered – Casual Summary of Assignment Conditions (SAC)”, I do not consider Mr Kim’s new employment with dh Appointments is acceptable in the sense required by s.120(1)(b)(i) of the Act because it is casual in nature and the new rate of payment is not comparable. Mr Kim’s weekly remuneration at Seaway was $1,384.50 for permanent employment whereas his weekly remuneration at dh Appointments is $1,538.63 ($41.03 per hour x 37.5 hours). This falls short of a casual wage based on the Seaway rate of pay ($1,730.63) by $192.00 per week.

Conclusion

[19] The application before me seeks an order reducing the amount of redundancy pay to zero on the basis that Seaway has obtained other acceptable employment for the employee. As I am not satisfied Seaway obtained for Mr Kim “other acceptable employment”, I decline to reduce the redundancy pay to which Mr Kim is entitled to under s.119 of the Act and dismiss Seaway’s application.

DEPUTY PRESIDENT

Appearances:

Ms J McMonagle for Seaway HCO Pty Ltd.
Mr K Kim on his own behalf.

Hearing details:

2021.
Melbourne (via Telephone):
June 16.

Printed by authority of the Commonwealth Government Printer

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 1   Exhibit R3

 2   [2016] FWCFB 5467.

 3 [2015] FCAFC 189 at [12].

 4   Clothing & Allied Trades Union of Australia v Hot Tuna Pty Ltd (1988) 27 IR 226; Clothing Trades Award 1982(1) [1990] AIRC 980; (1990) 140 IR 123.

 5 [2015] FCAFC 189 at [45].

 6   FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia [2015] FCAFC 90 at [20].

 7 Ibid at [21]; [2015] FCAFC 189 at [42], [60].

 8 (1988) 27 IR 226 (Munro and Peterson JJ, Leary C) at 230-231.