The Mad Butcher Pty Ltd

[2017] FWC 469

[2017] FWC 469

FAIR WORK COMMISSION

DECISION

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

The Mad Butcher Pty Ltd
(C2016/6727)

DEPUTY PRESIDENT BINET PERTH, 20 JANUARY 2017

Variation of redundancy pay – whether offers of alternative employment were ‘acceptable’ – alternative employment not acceptable – application dismissed.

[1] On 14 November 2016, The Mad Butcher Pty Ltd (The Mad Butcher)applied (Application) to the Fair Work Commission (FWC)for an order (Order) pursuant to section 120 of the Fair Work Act 2009 (FW Act) to vary the amount of redundancy pay to be paid to Mr Gary Shorter (Mr Shorter), Mr Murray Gardiner (Mr Gardiner) and Mr James Brown (Mr Brown) (collectively the Employees).

[2] The Mad Butcher sought that the amount of redundancy pay be reduced to zero or, in the alternative, to the following respective amounts:

• Mr Shorter $7,448

• Mr Gardiner $6,384

• Mr Brown $7,448

[3] On 17 November 2016, the FWC received a letter from the Employees, collectively, which advised that they object to the FWC making the Order sought by The Mad Butcher.

[4] On 24 November 2016, directions were issued to all parties (Directions) directing The Mad Butcher to file in the FWC and serve on each of the Employees an outline of submissions in support of the Application and any witness statements, authorities and copies of documents upon which it sought to rely for the Application.

[5] On 1 December 2016, The Mad Butcher filed an outline of submissions and 5 attachments in support of the Application, namely correspondence and payslips between The Mad Butcher and the Employees in respect of the Employees’ termination pay and redundancy payments.

[6] The Directions also required the Employees, either singularly or collectively, to file in the FWC and serve on The Mad Butcher an outline of submissions in response to the Application and any witness statements, authorities and copies of documents upon which they sought to rely for the Application.

[7] On 6 December 2016, the Employees collectively filed a response to The Mad Butcher’s submissions.

[8] On 15 December 2016, The Mad Butcher and the Employees filed an Agreed Statement of Facts which the parties were advised would be admitted into evidence and considered not in dispute.

[9] The Directions contained an invitation for either party to make a request to be heard orally in relation to the Application by close of business, Friday 16 December 2016. The parties were advised that, should neither party wish to make oral submissions, and subject to my review of the materials filed in accordance with the Directions, a conclusion about the Application may be made on the written materials filed.

[10] No request to be heard orally was received from either party on or before close of business on Friday 16 December 2016.

Factual circumstances

[11] The Employees were employed by The Mad Butcher as Beef Boners (Boners) in the boning division, which consisted only of the three Employees. Mr Brown and Mr Gardiner were employed as Boners. The Mad Butcher in its submissions described Mr Shorter as a knife hand.  1 Mr Shorter says that he is employed as a Beef Slicer.2

[12] The Employees were employed on a piece rate for each body of beef they boned. The number of bodies boned varied during the Employees’ employment according to demand and seasonal variations. 3 The Employees say that in peak season the number of bodies of beef might rise as high as 32 bodies.4

[13] The Mad Butcher say that a review of the boning division revealed that it was unprofitable and unsustainable in its current form. For this reason, on or around mid-September 2016, The Mad Butcher commenced a trial outsourcing boning. The Mad Butcher say that the outsourcing trial produced startling results, which included a higher yield of product (significantly more beef produced from the carcass) and a longer shelf-life for consumers. 5

[14] On 7 November 2016, The Mad Butcher advised Employees that the beef boning division would be outsourced permanently and that they would be offered redeployment with The Mad Butcher in the classification of Butcher at the same location without interruption to their continuity of service. The offer of redeployment contemplated a change in calculation of remuneration from piece rates to an hourly rate of $28 per hour. The proposed hourly rate was in excess of that prescribed for the classification of Butcher in the applicable award, being the Meat Industry Award 2010 (Award). The proposed hours of work were 38 hours per week. 6

[15] On 9 November 2016, the Employees were asked whether they wished to accept the offer of redeployment. All three Employees verbally declined that offer. The Employees were then verbally advised that their positions would become redundant effective at the end of the shift on Friday 11 November 2016. 7

[16] On 10 November 2016 the Employees handed a letter to Mr Neil Hall (Mr Hall), Meat Operations Manager, expressing concerns about the manner in which they had been treated. 8

[17] On 11 November 2016, at the end of their shift, the Employees were handed a letter confirming in writing that their positions in the boning room would become redundant at the end of the shift. 9

[18] None of the Employees attended work as scheduled on 14 November 2016. 10

[19] In the morning of 14 November 2016, Mr Brown sent an email to Ms Angelique Pistilli (Ms Pistilli), HR/Payroll Manager at Galati Group of Companies. The email stated that: “…we ask that all monies be paid into our nominated accounts no later than close of business on Friday 18^th of November.” Mr Brown indicated that the amount deposited should include termination pay, redundancy, long service leave, holiday pay, superannuation, payment in lieu of notice and any other outstanding payments due be paid to the Employees. 11

[20] In light of the correspondence of 10 November 2016, the Employees’ collective non-attendance at the workplace on Monday 14 November 2016 and the email received from the Employees on the same date, The Mad Butcher decided to process the Employees’ termination payments as requested. 12

[21] In the afternoon of 14 November 2016, the Employees were each sent an email from Ms Pistilli which attached a letter signed by Mr Hall regarding the Employees’ employment and confirming the outcome and consequences to the Employees of the review of The Mad Butcher’s operational requirements. The letters confirmed that an offer of ongoing employment as a ‘Butcher’ had been made to each of the Employees, on a full-time basis (38 hours per week) at $28.00 per hour, but that they had declined the offer. The letters stated that that alternative employment was in the same location as the current employment and took into consideration the Employees’ skills and competencies for the Butcher role. The letter advised redundancy pay had been withheld pending an application to the FWC for an order that it be reduced. 13

[22] The termination payments were processed on 14 November 2016 and notice of payment was made to each of the Employees via email attaching a payslip. 14

[23] This Application was subsequently made to the FWC seeking a variation to the Employees’ redundancy pay otherwise payable to the Employees.

Relevant Statutory Provisions

[24] Section 120 of the FW Act states that:

“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.”

[25] Section 119 of the FW Act states that:

“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

[26] It was not contested that the Employees were covered by the Award. Clause 17.1 of the Award provides that redundancy pay is provided for in the NES. I am therefore satisfied that any entitlement to redundancy pay, if it arises, does so by virtue of section 119 of the FW Act.

Consideration

[27] At the time the Employees were made redundant they were remunerated on a piece rate for each body of beef they boned. The parties agree that the number of bodies boned varied during the Employees’ employment according to demand and seasonal variations. 15 The Employees say that in peak season the number of bodies of beef might rise as high as 32 but that the average number of bodies of beef was 25. The parties agreed that this equated to an average income for each of the Employees of $2040 gross per week.

[28] Both Mr Shorter and Mr Brown have been employed by the Mad Butcher for three years. Mr Gardiner has been employed by the Mad Butcher for two years.

[29] The maximum amount of redundancy pay that the Employees would each be entitled to, and the maximum amount The Mad Butcher is seeking to pay, is set out below:

Employee	Agreed Average Weekly Rate of Pay	Length of Service in Years	Maximum NES Entitlement in Weeks	Maximum Amount of Redundancy Pay Payable in $	Maximum Amount of Redundancy Pay Proposed to be Paid by the Mad Butcher in $
Mr Shorter	$2040	3	7	$14,280	$7,448
Mr Gardiner	$2040	2	6	$12,240	$6,384
Mr Brown	$2040	3	7	$14,280	$7,448

[30] The grounds on which The Mad Butcher seek to have the amount of redundancy pay reduced is that it asserts that it obtained other acceptable employment for each of the Employees.

[31] The question of what constitutes ‘other acceptable employment’ in the context of section 120 was summarised by Deputy President Sams in Spotless Services Australia Ltd 16 as follows:

“…

• The test of what constitutes ‘acceptable employment’ is an objective one. It does not mean it must be acceptable to the employee.

• Acceptable employment is not identical employment as no two jobs could be exactly the same.

• An employee must meaningfully cooperate with the employer in exploring or considering options for alternative positions.

• An employee’s prima facie entitlement to redundancy pay may be at risk if the employee refuses an alternative position, which is found to be objectively ‘acceptable’.

• The acceptance of alternative employment by one or more persons in a group of redundant employees, does not necessarily make the alternative employment ‘acceptable’ for all of them. Each employee’s individual circumstances must be taken into account.

• There are a range of factors of varying weight, according to an employee’s particular circumstances, which may be taken into account to assess the acceptability of alternative employment.”

[32] In DRW investments t/a Wettenhalls v Timothy Richards & Ors, 17 Deputy President Sams identified those factors as:

“[183] Notwithstanding the above general principles, whether the alternative employment is acceptable, will likely include consideration the following matters:

• rates of pay
• hours of work;
• work location;
• seniority;
• fringe benefits;
• workload;
• job security;
• continuity of service;
• accrual of benefits;
• probationary periods;
• care’s responsibilities; and
• family circumstances.

This list is not exhaustive. There may be other relevant factors.”

[33] The exercise of comparing wages and terms and conditions of employment involves a global approach rather than item by item comparison of every term and condition. 18

[34] The alternative employment offer by The Mad Butcher to the Employees was employment in the position of Butcher at the same location without interruption to their continuity of service. The offer of redeployment contemplated a change in calculation of remuneration from piece rates to an hourly rate of $28 per hour. The proposed hours of work were 38 per week for each of the Employees. This would equate to a gross weekly wage of $1064 per week, a reduction of $976 gross per week from their previous average weekly earnings.

[35] The Employees submit that positions offered do not constitute acceptable alternative employment because: 19

(a) the duties of a Butcher are not within their area of expertise;
(b) their weekly wage would be significantly lower;
(c) given operational changes in The Mad Butcher’s business, the positions were likely to become redundant in the near future; and
(d) the position of Butcher was a ‘lesser’ role than their current positions as Boners or Slicer.

[36] No evidence was tendered as to the duties which The Mad Butcher proposed to require the Employee’s to perform in the position of Butcher. Nor was evidence tendered of the skills and experience of each of the Employees. In the absence of the evidence necessary to determine whether the Employees had the necessary expertise to perform the duties which The Mad Butcher would have required of them, I will treat this factor as neutral.

[37] The weekly wage offered to the Employees was significantly lower than their agreed existing average weekly earnings.

[38] There was no evidence tendered to enable me to determine with any certainty that the positions offered were likely to be made redundant in the near future. I will therefore treat this factor as neutral.

[39] Under the Award, the classifications of Boner and Slicer attract lower minimum weekly wages than the classification of Butcher. In the absence of any other evidence that the position of Butcher is a lessor role, I am satisfied that the position of Butcher is at least equivalent in status.

[40] I am satisfied that the reduction in weekly wages was so substantial that, on its own, it is sufficient to make the alternative employment offered to the Employees not acceptable for the purposes of section 120 of the FW Act.

[41] It follows that the Application must be dismissed. An order to that effect (PR589622) will be issued with this decision.

DEPUTY PRESIDENT

 1 Applicant’s submissions at [1].

 2 Respondents’ submissions at [1].

 3   Applicant’s submissions at [2]-[3].

 4 Respondents’ submissions at [3].

 5   Applicant’s submissions at [4]-[11].

 6 Ibid at [17].

 7 Ibid at [19].

 8 Ibid at [24].

 9 Ibid at [19].

 10 Ibid at [26].

 11   Ibid at [27]-[28] and Attachment B.

 12 Applicant’s submissions at [30].

 13   Ibid at [29] and Attachment C.

 14   Applicant’s submissions at [31]-[32].

 15   Ibid at [2]-[3].

 16   [2016] FWC 4505 at [65].

 17   [2016] FWC 461 at [183].

 18   Nicole Allman and Others v TeleTech International Ltd [2008] FCA 1820.

 19   Respondents’ submissions.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR589618>