Trehen Camp Management Services P/L T/A Trehen v Mr Colin Walden

[2015] FWC 1217

[2015] FWC 1217

FAIR WORK COMMISSION

DECISION

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

Trehen Camp Management Services P/L T/A Trehen
v
Mr Colin Walden
(C2015/1114)

COMMISSIONER SPENCER BRISBANE, 6 MARCH 2015

Variation of redundancy pay.

[1] This decision relates an application filed pursuant to s.120 of the Fair Work Act 2009 (Cth) (the Act). The application was made by Trehen Camp Management Services P/L T/A Trehen (the Applicant).

[2] The Applicant has applied to the Fair Work Commission (the Commission) seeking that the redundancy entitlements of Mr Colin Walden (the Respondent) be reduced to nil.

[3] The Applicant has made the application on that basis that the Applicant submits that it has obtained other acceptable employment for the Respondent.

[4] Directions were issued for the filing of material in the application. The parties were directed to ensure that their submissions included submissions in relation to whether the matter should proceed by way of formal hearing or determination on the papers. Neither party requested a formal hearing in the matter. On the basis of the nature of the application and the material filed in the matter by the parties, the Commission determined that the matter could efficiently be determined on the papers.

[5] While not all submissions and evidence filed in this matter have been referred to, all of such have been considered.

Background

[6] The Applicant commenced employment as a permanent Night Chef with the Respondent in August 2013. The Applicant was promoted to Day Chef on 6 December 2013. The Applicant commenced in the position of Logistics/HSE Support Officer on 2 December 2014.

[7] On 8 January 2015, the Respondent informed the Applicant that his position was made redundant and offered to return him to his previous role as Day Chef after one month’s notice. The Applicant was paid as a Logistics/HSE Support Officer for this notice period, although he performed the duties of a Day Chef during this time. On 15 January 2015, the Applicant confirmed he would accept the Day Chef role and commenced a two week period working as a Day Chef. He continues in this position.

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 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; 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.

[10] The Applicant specifically relies upon s.120(1)(b)(i).

[11] The Applicant submitted that an Employment Agreement covered and applied to the employment of the Respondent. The Employment Agreement is silent on the issue of redundancy. Accordingly, the National Employment Standard relating to redundancy applies to the Respondent.

Applicant’s submissions and evidence

[12] The Commission issued Directions to the parties regarding the filing of submissions and evidence relating to the application. The Applicant filed an affidavit of Mr Robert Nugent, the Human Resources Manager of the Camp, a document containing the Applicant’s remuneration history from the start of his employment with the Applicant, the Employment Agreement and a letter from the Respondent to the Applicant explaining the downturn in business and attaching the application.

[13] The Applicant indicated in the application that the Applicant had obtained acceptable employment for the Respondent in the form of the Day Chef role, which the Respondent had previously performed. Mr Nugent stated in his affidavit that the rate of Day Chef working 168 hours per 28 days was $75,983.79 gross plus superannuation, compared to that of the Logistics/HSE Support Officer working the same hours per 28 days period of $81,333 gross plus superannuation. There is a reduction in salary of $5,349.21 per year. Mr Nugent stated that there were no changes in the Respondent’s conditions other than his pay level for the two roles.

[14] The Applicant indicated in the application that the amount of redundancy owing in total for the Respondent was four weeks of severance payment, or a gross amount of $5,660.48.

Respondent’s submissions and evidence

[15] The Respondent agreed that the Applicant had found him suitable alternative employment by returning him to his original position as Camp Manager, Chef in a full time position. The Respondent stated that he did not contest the reduction in the redundancy as he did not hold the Logistics/HSE Support Officer position for very long (a period of 4 weeks), and that he understood why the position was no longer available.

Consideration

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

[17] 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 in that matter that where there is no entitlement under s.119 there can be no order to reduce the “entitlement” pursuant to s.120.2

[18] The starting point is that employees are entitled to redundancy pursuant to the provisions of the Act, and s.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. I accept that the Respondent’s position of Logistics/HSE Support Officer was terminated at the employer’s initiative because they no longer required the job to be done by anyone. The position was made redundant and the Respondent has an entitlement to redundancy pay.

[19] Under s.119 of the Act, a period of 1 to 2 years service corresponds with an entitlement to redundancy pay of 4 weeks. On the material filed, both parties accept, and the Commission is 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.

[20] The critical issue is, on the material, should the Respondent forgo an entitlement to redundancy payment in circumstances where the Respondent has continued to be employed by the Applicant, albeit in a different role with a reduction in salary of $5,349.21 per year.The onus rests solely on the Applicant to prove their case under either of the alternatives put in s.120.

[21] The Commission must consider the submissions and evidence regarding any alternate employment to enable the Commission to assess the “acceptable” nature of that employment. The Respondent accepted the offer of employment as a Day Chef.

[22] In the matter of Australian Chamber of Manufacturers v Derole Nominees Pty Ltd 3, the 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 a like nature, the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.” 4

[23] In Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd 5, the Full Bench found:

“...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. In this case, the evidence before the commissioner was that the five employees in question were given notice of the transfer with access to management to raise any difficulties involved and that there was no resort to this access.” 6

[24] It is clear that the Respondent accepted the alternative employment; the position has changed from Logistics/HSE Support Officer to Day Chef, with a reduction in salary.

[25] Despite the fact that the Respondent accepted the alternative employment, given the reduction in salary, this does not automatically constitute acceptable alternative employment. The Applicant has not demonstrated that the alternative employment was acceptable pursuant to s.120(b)(i) of the Act (given the reduction in salary) to obviate their total obligation to pay redundancy.

[26] In the application, the Applicant sought that the Commission reduce the redundancy pay to $707.56 (19 hours x $37.24, or half a week) from $5,660.48 (4 weeks x 38 hours x $37.24). The Respondent stated that he was not contesting the reduction.

[27] Accordingly, in all the circumstances, I am satisfied that, in accordance with s.120 (1)(b)(i) of the Act, I should exercise my discretion pursuant to s.120(2) of the Act and reduce the amount of redundancy pay on the basis that the alternative employment has been obtained by the Applicant but with a small reduction in salary.

[28] I have exercised my discretion to reduce the severance amount to $707.56. This amount, less the appropriate tax, is payable within 14 days from the date of this Decision.

[29] I Order accordingly.

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 (1990) 140 IR 123.

 4 (1990) 140 IR 123 at pp128.

 5 (1988) 27 IR 226.

 6 (1988) 27 IR 226 at pp230 - 231.

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