Soldine Pty Ltd T/A JRs Supermarket (Sunset) v Ms Nicola Pattison

[2016] FWC 928

[2016] FWC 928

FAIR WORK COMMISSION

DECISION

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

Soldine Pty Ltd T/A JRs Supermarket (Sunset)
v
Ms Nicola Pattison
(C2016/2040)

COMMISSIONER SPENCER BRISBANE, 24 FEBRUARY 2016

Variation of redundancy pay.

[1] This decision relates to an application filed pursuant to s.120 of the Fair Work Act 2009 (Cth) (the Act). The application has been made by Soldine Pty Ltd T/A JRs Supermarket (Sunset) (the Applicant).

[2] The Applicant has applied to the Fair Work Commission (the Commission) seeking that the redundancy entitlement of Ms Nicola Pattison (the Respondent) be reduced to nil.

[3] The Applicant has made the claim 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. The Respondent stated they had received conflicting advice regarding the redundancy payment and therefore brought the application.

[4] The parties are located in Mount Isa, Queensland. Accordingly a telephone conference was held by consent to discuss the main issues between the parties. Prior to this conference, the relevant legislative provisions were sent to the parties. Following the initial conference, the parties were requested to provide any further written material for consideration between the parties. A further conference was then conducted on 1 February 2016. At the conclusion of the conference the parties were asked to confirm whether they wished to provide any further information. The parties confirmed that they had provided and set out at the conference all of the material they wished to be considered, in the assessment of the redundancy payment.

Background

[5] The Applicant conducted two supermarkets; the Turanga and the Sunset supermarkets. The Owner/Director of the supermarkets had fallen ill and the decision was made to sell the Sunset supermarket. As a result, the Applicant argued that the Respondent’s job had been made redundant.

[6] The Applicant argued that they had secured “other acceptable employment” for the Respondent with the buyer of the Sunset supermarket. The Respondent refuted this and sought a redundancy payment.

[7] The Respondent had 14.8 years of service at the time the employment contract was finalised. The Applicant had paid all outstanding wages, accrued annual leave and long service leave payable for 10 years service.  The Applicant also indicated that it would pay the pro rata Long Service Leave for the remaining 4.8 years of service but as at the conference date, this had not been done. The Applicant indicated that they were awaiting the outcome of this Decision and planned on paying the amount for pro rata Long Service, together with any redundancy payment ordered, as a whole.

Relevant legislation and award clauses

[8] 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

[9] 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.

Applicant’s submissions and evidence

[10] The Applicant indicated in the application that the amount of redundancy owing in total, for the Respondent, in accordance with the above table in s.119(2), is 12 weeks wages.

[11] At the initial conference, the details of the Respondent’s job offer with the new employer had not been confirmed. Accordingly, after the initial conference held in this matter, the Applicant submitted that they contacted the new owner, to request that they provide the Respondent with a letter of employment, outlining the conditions that the new owner was offering to the Respondent. The Applicant submitted that they were met with some difficulty getting this information from the new owner and therefore they encouraged the Respondent to follow up directly with the new owner. The Applicant submitted that their understanding was that the Respondent would maintain full-time employment but at the “recommended retail rate”. The Applicant submitted that they were paying the Respondent a higher rate, in order to retain employees in the business and that there had been a stage where this was difficult, due to more lucrative salaries being offered at the mines.

[12] The Applicant submitted that there was discussion and review in relation to whether the Turanga store could accommodate some employees from the Sunset store, if the new owner did not employ them. However, that was deemed not feasible, as there were sufficient employees at that store and the company stated it could not afford to employ any more at that store, unless hours were taken away from existing employees.

Respondent’s submissions and evidence

[13] The Respondent provided copies of the Letter of Engagement from the new owner for the position of Supermarket Operator/Assistant. The Respondent also provided copies of payslips showing the hourly rate of pay with the new owner is $21.84, while the hourly rate of pay received from the Applicant was $29.7397. The Respondent also stated that she had to work some extra ordinary hours than with the Applicant.

[14] The Respondent objected to her job being made redundant as she submitted that she was never a permanent employee at the Sunset store, and that her permanent full-time role was Assistant Manager at the Turanga store. The Respondent submitted that she occasionally assisted at the Sunset store, when staff shortages or other business issues arose, but that this was on a temporary basis.

[15] The Respondent submitted that she did not receive assistance from the Applicant in relation to obtaining alternative employment with the new owner. On 16 December 2015, the Respondent submitted that she met with the new owner herself and discussed the terms of employment. The Respondent submitted that she requested full-time employment (that is what she previously held), for the benefits and job security, but that she was advised by the new owner that they were not employing anyone on a full-time basis, because they had not budgeted for such, but undertook to consider such.

[16] On 18 December 2015, the Respondent submitted that the new owner held a meeting to interview employees, and that Ms Joy Broad and Ms Lucy Rivas were in attendance (from the Applicant). At this meeting, the Respondent submitted that the new owner informed her that they were prepared to employ the Respondent on a full-time basis, but that she would be the only employee offered that.

[17] The Respondent confirmed that she had been paid amounts for wages in lieu of notice and accrued annual leave. The Respondent requested the payment of pro rata long service leave, as she was 4 months short of 15 years’ service, at the time her position was made redundant and the new owner had clearly communicated it would not recognise continuity of service.

Consideration

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

[19] Firstly, the wording of the section is 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. 1 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.120.2

[20] 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. The Respondent’s position of Assistant Manager on the Applicant’s information was no longer required, on the sale of business.

[21] The Respondent’s period of service has been stated in the application as approximately 14 years and 8 months. Under s.119 of the Act, a period of over 10 years’ service corresponds with an entitlement to redundancy pay of 12 weeks. 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. The Respondent had been paid her first entitlement for long service leave, up to 10 years of service. Relevantly, what must be considered is whether the Applicant obtained other acceptable employment for the Respondent.

[22] A Full Bench of the Commission in The Maritime Union of Australia v FBIS International Protective Services (Aust) Pty Ltd 3 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.” 4 [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.” 5

[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. 6

[44] In Allman v Teletech International Pty Ltd, 7 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.”8

[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.” 9

[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. 10 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.” 11”

[23] On the material provided, the Applicant recommended the Respondent for the position and the new owner desired to gain the experience of the Respondent within the new business. Whilst the Respondent submitted that she negotiated the conditions of her employment with the new owner, the Applicant attended with the staff and the new owners, and in the circumstances of the Respondent, it is considered that they brought about the opportunity for the Respondent to engage in discussions with the new owner for the other employment.

[24] The Applicant’s conduct fell short of the standard that the employer must be “a strong moving force towards the creation of the available opportunity” 12. It is accepted that the Applicant brought the parties together, as one of the factors to be considered, but the Applicant did not bring about the employment offer13.

[25] The Respondent played a role in concluding the new contract and the differences in the resulting employment conditions must be considered in relation to whether the other employment was “acceptable”.

[26] The Commission must consider the new employment contract, to enable the Commission to assess the “acceptable” nature of that employment. The Applicant made limited submissions in respect of the “acceptable” nature of the Respondent’s final position. The Respondent provided the detail of the new position, stating she accepted an offer of employment with the new owners of the Sunset store with a reduced hourly rate of remuneration, and in circumstances where the new owners did not recognise her length of service.

[27] In the matter of Australian Chamber of Manufacturers v Derole Nominees Pty Ltd 14, 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.” 15

[28] In Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd 16, the Full Bench 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...” 17

[29] On the information presented, the Applicant paved the way for the Respondent’s further discussions, resulting in the engagement with the new employer. However, the Respondent’s later efforts were important in securing the final offer of employment. The Respondent accepted the offer of employment from the new owners, which is a full-time position with a reduced pay rate ($29.74/hour reduced to $21.84/hour). While the Respondent was previously the Assistant Manager when she was employed by the Applicant, the Respondent stated that she is now only a team member, which is reflected in the reduced hourly rate. In addition, the accrual of service starts again with the new employer, rather than continuing.

[30] Whilst the Respondent agreed to the offer of other employment, given that the new job was subject to a probationary period and prior service was not recognised and there was a reduction in the pay rate and the job status, the new job, therefore, was not on commensurate terms with the prior job. 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 a degree to obviate their total obligation to pay redundancy.

[31] The Applicant’s endeavours in supporting the Respondent’s future employment with the new owner are acknowledged. However, the Respondent’s efforts in securing the final alternative employment are recognised. The Respondent had a significant period of employment and the reduction in hourly pay rate and the loss of the recognition of accrued service will have an on-going negative financial impact on the Respondent.

Conclusion

[32] 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, I should exercise the discretion pursuant to s.120(2) of the Act, and reduce the amount of redundancy pay, on the basis that the other employment was not ‘obtained’ (as per the case law) by the Applicant and the resultant position provides lesser terms. The role of the Applicant with the other employment is however recognised.

[33] The Respondent has an entitlement to 12 weeks redundancy pay for over 10 years of service. I have exercised the discretion pursuant to s.120(2) to reduce the amount to eight (8) weeks redundancy payment (based on a 38 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.

[34] Whilst this does not form part of the determination or the Order, it is noted that the Applicant, during the course of the proceedings, undertook to pay to the Respondent the amount of the outstanding long service leave accrued to the final day of employment. The Applicant further undertook to pay this at the same time as any payment ordered in this matter.

[35] An Order reflecting the terms of this Decision will issue separately 18.

COMMISSIONER

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

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

 3   [2014] FWCFB 6737.

 4 (1990) 140 IR 123, at 127.

 5 (1990) 140 IR 123, at 128.

 6   [2013] FWC 1327, at para 12.

 7 [2008] 178 IR 415.

 8 [2008] 178 IR 415, at 418.

 9 [2008] 178 IR 415, at 419.

 10 [2008] 178 IR 415, at 419.

 11 [2008] 178 IR 415, at 419.

 12 (1990) 140 IR 123, at 128.

 13 [2008] 178 IR 415, at 419.

 14 (1990) 140 IR 123.

 15 (1990) 140 IR 123 at pp128.

 16 (1988) 27 IR 226.

 17 (1988) 27 IR 226 at pp230 - 231.

 18   PR568389.

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