Stream Communications Pty Ltd T/A Tech2home v Ms Cristina Bonomo
[2011] FWA 62
•6 JANUARY 2011
[2011] FWA 62 |
|
DECISION |
Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay
Stream Communications Pty Ltd T/A Tech2home
v
Ms Cristina Bonomo
(C2010/5748)
COMMISSIONER ROE | MELBOURNE, 6 JANUARY 2011 |
Application to reduce to nil the redundancy payments to Ms Bonomo.
[1] This is an application under s.120 of the Fair Work Act 2009 (the Act) to vary to zero the redundancy pay otherwise due under the NES on the grounds that the employer offered the employee suitable alternative employment and that employee refused to accept that suitable alternative employment.
[2] The applicant employer is Stream Communications Pty Ltd (the Applicant). The application relates to an employee Ms Cristina Bonomo.
[3] The application was lodged on 30 November 2010 and was heard on 22 December 2010.
[4] The Applicant was represented by Mr Glen Powys and Mr M Wong who are senior employees of the Applicant. The affected employee, Ms Bonomo was represented by a barrister Mr A McNab who was assisted by Mr M Francke. There was no objection to Mr McNab’s appearance and I granted leave for him to appear.
[5] At the conclusion of the proceedings on 22 December 2010 I issued a decision on transcript rejecting the Application as follows:
“This is an application to provide relief from the payment of redundancy pay under section 120 of the Fair Work Act. The matter that's being considered is whether the employer has obtained other acceptable employment for the employee. I've got no doubt that the original offer made in July this year was not suitable alternative employment. It was employment that required the performance of duties on different days at a different location and at a significantly lower grade of work.
However, the matter that we need to consider is the offer that was made on 24 August 2010, and in that offer the issues about the times of duty - that is, the days of duty - and the location of the duties and the nature of the work were no longer at issue. I don't regard the issue of the change in the number of stores as a particularly relevant consideration. I think that it would still be suitable alternative employment even if the number of stores were changed and even if there was some small change in the level of responsibilities.
I have to read the contract of employment as a reasonable employee would read it, not how the employer might have thought that they intended it, and it's clear to me that the offer of employment that was made on 10 April 2008 to Ms Bonomo did include a company vehicle as part of the employment package. It was clear that fuel for private trips of greater than 100 kilometres had to be reimbursed. That was not part of the letter of 10 April 2008, but certainly was subsequently advised to the employee.
But apart from having to reimburse for - and get approval for - private trips of greater than 100 kilometres, it's pretty clear from the evidence that the employee had access to and right of use of the motor vehicle, and it's clear, from the employer's evidence, that the trip to and from work was paid for during the period since 2008 but was not going to be paid for in the offer of 24 August 2010. I regard the trip to and from work as a pretty significant part of any employment package.
It's also clear that the salary offered on 24 August was 2.5 per cent lower than the salary currently paid to the employee. I don't doubt that Mr Powys, on behalf of the company, thought that what he was offering was fair. However, given the earlier clearly problematic offers in July, it was essential for the employer to make the new offer clearly and correctly, and I accept the evidence of Ms Bonomo that she told the HR manager about the 2.5 per cent wage increase.
So I'm not satisfied that the requirements of section 120 of the act have been met, I don't believe that Ms Bonomo was offered acceptable alternative employment, and therefore, I will dismiss the application. Ms Bonomo is entitled to a redundancy payment, and I expect that that redundancy payment will now be paid quickly, given that Ms Bonomo has not had the benefit of her entitlements for a very considerable period since her termination of her employment.
I'd like to thank the company for the way in which they have presented the evidence to the proceedings and the honest way in which they put forward the case, and also thank Ms Bonomo and her representative for the way in which they have put forward the case. So as I've said, the application is dismissed and Ms Bonomo is entitled to a redundancy payment, and I will publish reasons in respect of this matter in the new year.” 1
[6] I now publish those reasons.
Statutory provisions
[7] Section 120 of the Act is to be found in Chapter 2, Part 2-2, Division 11. Division 11 relates to notice of termination and redundancy pay and is one of the National Employment Standards (NES). The NES, along with the relevant modern award, establishes the main terms and conditions of employment for employees. 2 The NES must not be contravened by an employer.3
[8] A modern award must not exclude the NES or any provisions of the NES although it may include terms with respect to the NES that it is expressly permitted to include under the NES or the relevant regulations. 4 A modern award may include terms ancillary or incidental to the NES or supplement the NES but only to the extent that the effect of those terms is not detrimental to any employee in any respect when compared to the NES.5
[9] The NES provisions in relation to notice of termination and redundancy pay specify the requirements for notice of termination or pay in lieu of notice. 6 Section 119 specifies the entitlement to and the amount of redundancy pay. Section 120 provides:
“(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, FWA may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that FWA 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.”
[10] The Applicant relies on paragraph (b)(i), that is that it has obtained other acceptable employment for the employee concerned.
[11] The relevant modern award is the Commercial Sales Award 2010. This award does not contain any terms which alter the NES relevant to this application. The provisions as they appear in the Act are relevant therefore to the determination of this matter.
[12] In considering a similar provision to s.120 of the Act in the Clothing Trades Award 1982 a Full Bench of the Commission, in Australian Chamber of Manufactures and Derole Nominees 7 (Derole), found that:
“The provision does no more than provide an avenue by which an employer may apply to the Commission to vary the obligation which otherwise would be imposed by the award. It does not follow from the terms of the clause that an employer coming within its scope will achieve necessarily full or partial relief. The level of relief, if any, to apply in a given case is a matter to be determined as an exercise of discretion in the circumstances of that case.” 8
[13] This has not changed. Fair Work Australia has a discretion to reduce redundancy pay if the requirements set out in s.120(1)(b) of the Act are met. This is clear from the use of the word ‘may’ in subsection 120(2).
Considerations
[14] There is no question that the Applicant has ‘obtained’ other employment for Ms Bonomo.
[15] Commissioner Bissett in Vicstaff Pty Ltd T/A Stratco 9 usefully analysed the relevant considerations for determining if other employment obtained by the employer for the employee is ‘acceptable employment. Commissioner Bissett quoted the case of Derole where a Full Bench found:
“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 like nature; the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.” 10 (emphasis added)
[16] In Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd 11(Hot Tuna), a Full Bench of the Commission found that the onus rested on the employer making an application to vary redundancy pay to demonstrate that the alternative employment is acceptable. The determination of that issue may involve a consideration of such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and travelling time. The determination of the question of acceptability of the employment however can only be done on the evaluation of the facts proved in evidence or otherwise established.
[17] I adopt the approach of Commissioner Bissett:
“The determination of whether or not alternative employment is acceptable must be determined objectively and not subjectively from the perspective of the employer or employees. 12 That the alternative employment may be rejected does not objectively make it unacceptable nor does the fact that the employment was offered make it, by virtue of the offer, acceptable. Further, that one of the persons out of a group may have accepted the employment does not make the employment acceptable for the others in the group.13 The reasons for the acceptance of alternative employment are many and varied and general conclusions should not be drawn from a particular circumstance.
It is therefore incumbent upon the employer (Vicstaff) in this matter to demonstrate that the alternative employment is acceptable taking into account all matters relevant in such a consideration.” 14
Findings
[18] Ms Bonomo was employed by the Applicant for a continuous period of more than seven years prior to being made redundant.
[19] On or about 10 April 2008 Ms Bonomo was promoted to the position of Client Relationship Executive and received a letter of that date from Meagan Robertson, Regional Operations Manager, which outlined the terms and conditions for that position which she accepted. 15 That letter included the provision “you shall receive a fully maintained motor vehicle as a component of your salary package. The vehicle is primarily for business purposes with reasonable private use. You will be required to keep a logbook details to measure percentage of business/ private use.”
[20] On 30 April 2009 Remo Adoncello, National Sales and Marketing Manager, wrote to Ms Bonomo advising her that her salary was increased by 2.5% effective 20 April 2009. This constituted $48,839 base salary, Base plus KPI $53,722.90 and Base plus KPI plus Superannuation $58,557.96. 16
[21] On 3 October 2008 Ms Bonomo together with other employees who had the use of a company vehicle were advised by email from Meagan Robertson, Regional Operations Manager, that the company were shifting to use Custom Fleet Cards instead of BP Cards. She also advised “Please keep in mind that fuel usage on your vehicle is monitored by NSW and reported to me taking into account where you live and the job that you do so it is important you are aware of this and to note this goes the same for Mobile Phones as well. Yes they are part of our package but be mindful that excessive use in these areas will be brought to my attention so keep it in mind.” 17
[22] On 20 July 2010 Craig Bartholomew on behalf of the Applicant advised Ms Bonomo that her position had “become redundant due to genuine operational reasons.” Ms Bonomo was advised that “Due to your previous experience working in a Call Centre and your familiarity with the Optus project, I am looking at the possibility of alternative work for you in the National Optus Dispatch. I should be able to provide a written response to you within two weeks from 20 July 2010.” 18
[23] The Applicant claimed that Ms Bonomo advised Meagan Robertson that she accepted the proposed new role on 20 July 2010 and then advised Meagan Robertson that she did not accept the role on 22 July 2010 and further advised on 26 July 2010 that she wanted more time to consider it. Meagan Robertson did not give evidence and Ms Bonomo denies that she ever accepted the proposed new role as an alternative to redundancy. I prefer Ms Bonono’s evidence in respect to this matter. However, it is not in contention that on 27 July 2010 Ms Bonomo rejected the proposed new role and in writing set out her reasons in detail. 19
[24] Ms Bonomo advised that the new role was not acceptable alternative employment for reasons that included:
- Lower rate of pay due to lack of mobile phone, laptop and car;
- Different work hours;
- Requirement to work Saturdays which is not possible due to the need to care for ill father in law;
- Different work location; and
- Return to lower position which she had performed earlier before several promotions. Inadequate use of her skills.
[25] Between 27 July and 24 August there was discussion between the Applicant and Ms Bonomo which resulted in a revised offer of redeployment being made by the Applicant on 24 August 2010. 20 This revised offer was rejected by Ms Bonomo on 30 August 2010. Her response was “I will not be accepting your redeployment offer for the same reason as outlined and discussed in all previous offers - they are not equivalent. I have now referred this to the Fair Work Ombudsman.”21
[26] On 30 August 2010 Glen Powys, Director, advised Ms Bonomo that “by your refusal to accept the offer, we take the position that you are declining employment and are tendering your resignation of employment effective immediately.” Ms Bonomo was paid her entitlements save for redundancy payments. 22
[27] Evidence was given by Mr Powys for the Applicant and by Ms Bonomo.
[28] Having heard the evidence I am satisfied that the revised offer of 24 August 2010 was an acceptable offer of alternative employment except in respect to the level of pay. That is the concerns in respect to working hours, location and duties were in my judgment satisfactorily dealt with. Ms Bonomo was concerned that the workload proposed for the new role was excessive in that a large number of additional stores would be involved and she was concerned that this was setting her up for failure. Having heard the evidence I am satisfied that this was not the case. Some changes in duties are a reasonable consequence of restructuring and redeployment. Ms Bonomo was also concerned that the requirements for receipt of the KPI component of her salary had changed and that this component was at risk in the new role. I am satisfied that this was the case but that the change was a natural consequence of moving to a new role and did not make the offer of alternative employment unacceptable.
[29] It is clear from the evidence that the changes in level of pay between Ms Bonomo’s former role and the role offered on 24 August were essentially the removal of the 2.5% wage increase which had been paid from 20 April 2009 and a significant change in the car component of the salary package.
[30] Mr Powys gave evidence that he never intended to reduce the pay by 2.5% and this was simply an error. It may well be true that Mr Powys did not intend to reduce the pay by 2.5%, however, the revised offer of 24 August 2010 which included the reduction of 2.5% was signed by Mr Powys 23 and I am satisfied that Ms Bonomo had no reason to doubt the accuracy of that offer and was entitled to rely on the accuracy of that offer.
[31] The offer of 24 August 2010 made it clear that the “use of this vehicle does not form part of your total package. In the event that the vehicle is retired or becomes unserviceable, no replacement vehicle will be made available.” Further, whilst the vehicle was available the conditions were that Ms Bonomo pay for all private usage costs including travel to and from work, any fringe benefits tax, and all fuel costs associated with private use. 24 Mr Powys gave evidence that it was never the situation that the use of the vehicle was a part of Ms Bonomo’s package. However, he conceded that this was what the contract of employment of 10 April 2008 said and he also conceded that Ms Bonomo had had private use of the vehicle throughout her employment since 10 April 2008 and had not been required to pay for fuel or other costs associated with private use of the vehicle and travel to and from work in particular. The only exception to this according to Ms Bonomo and Mr Powys was that at some point it had been agreed that private trips of more than 100 kilometers required approval from a manager.
[32] I am satisfied that the private use of the motor vehicle was a part of Ms Bonomo’s salary package and that the changes to this were a very significant reduction in her terms and conditions. I am also satisfied that the 2.5% reduction in pay was also a significant reduction in her terms and conditions. These two changes mean that the redeployment offered could not be considered reasonable alternative employment.
Should I reduce the amount of redundancy payment to a specified amount?
[33] A simple reading of section 120 of the Act suggests that the amount of redundancy pay owing can only be reduced in circumstances where the employer has: (i) found other acceptable employment; or (ii) cannot pay the amount otherwise owing. Should either of these circumstances exist I have discretion to determine the reduced amount of redundancy pay otherwise owing.
[34] I have determined that the employment found does not constitute ‘other acceptable employment’. There is no application that goes to the capacity of the employer to pay the amount owing (and this was not part of the application before me).
[35] There are no grounds for me to reduce the amount that otherwise should be paid. Based on the plain wording of the provisions of the Act I have a discretion to reduce the redundancy entitlement (to nil should I so decide) in circumstances where other acceptable employment is found.
[36] Having found that the employment obtained is not acceptable, the application to reduce the amount otherwise payable to Ms Bonomo is also rejected.
Conclusion
[37] I do not consider that the employer has demonstrated that the employment offered to Ms Bonomo is acceptable employment. The application is therefore dismissed.
[38] Ms Bonomo should be paid the full redundancy amount owing to her.
COMMISSIONER
Appearances:
Mr Glen Powys and Mr M Wong, senior employees, for the Applicant.
Mr A McNab assisted by Mr M Francke for the Respondent.
Hearing details:
22 December
Melbourne
2010
1 PN536 to PN542.
2 Section 43 of the Fair Work Act 2009.
3 Section 44 of the Fair Work Act 2009.
4 Section 55(1) and (2) of the Fair Work Act 2009.
5 Section 55(4) of the Fair Work Act 2009.
6 Section 117 of the Fair Work Act 2009.
7 AIRC [Print J4144], 12 September 1990.
8 Derole Page 2.
9 2010 FWA 3141, Paragraphs 23 to 32.
10 Derole page 5.
11 27 IR 226, in particular paragraph 230 to 231.
12 Feltex Australia Enterprise Agreement 2004, Watson SDP, 21 November 2006 [PR974699], at [32].
13 Derole, page 5.
14 2010 FWA 3141, Paragraphs 29 and 30.
15 Exhibit B-1.
16 Exhibit B-3.
17 Exhibit B-2.
18 Appendix 1 to Application.
19 Appendix 2 to the Application.
20 Appendices 5, 6 & 7 to the Application.
21 Appendix 8 to the Application.
22 Appendix 9 to the Application.
23 Appendix 5 to Application.
24 Appendix 5 to Application.
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