Underground Services Australia Pty Ltd

[2016] FWC 8373

[2016] FWC 8373

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Underground Services Australia Pty Ltd
(C2016/5951)

COMMISSIONER WILLIAMS PERTH, 23 NOVEMBER 2016

Variation of redundancy pay.

[1] This decision concerns an application by Underground Services Australia Pty Ltd (Underground Services) to reduce the amount of redundancy pay to which an employee, Mr Tomas Balnaitis (Mr Balnaitis), is entitled under section 119 of the Fair Work Act 2009 (the Act).

[2] The parties have provided written materials regarding this matter.

Factual findings

[3] The facts of this matter are not in dispute.

[4] Mr Balnaitis was employed by Underground Services for a little over three years.

[5] He was employed as a Project Engineer tasked with project management and engineering support across utility construction projects.

[6] Mr Balnaitis took a period of leave between the end of May 2016 through to 12 September 2016 and flew home to Lithuania.

[7] Mr Balnaitis indicated that he may not return to Australia for work and Underground Services agreed to keep his employment open as they were hopeful their pipeline of work and financial situation would improve.

[8] Mr Balnaitis did return to Australia and attended a meeting on 8 September 2016 with Mr Peter Wyatt (Mr Wyatt) the Operations Manager and Ms Kelly Peterson (Ms Peterson) the Senior HR Advisor. The discussion was around Mr Balnaitis’s employment future. At that time there were no opportunities to redeploy Mr Balnaitis elsewhere within the business due to a lack of projects. They discussed the options for him including either him resigning or a redundancy. Mr Balnaitis was given until 12 September 2016 to decide how he would like to proceed.

[9] On 12 September 2016 Mr Balnaitis again met with Mr Wyatt and Ms Peterson. At that time he indicated he wanted to take a redundancy. Underground Services indicated that they were not in a position to pay redundancy due to the financial position of the company which had been suffering due to the current downturn. Mr Balnaitis understood that the Fair Work Commission (the Commission) would decide whether a redundancy was payable because of the company’s financial circumstances.

[10] The following day a letter of termination was issued by Underground Services to Mr Balnaitis. That letter explains the business had conducted a review of its labour requirements and concluded that Mr Balnaitis’s position of Project Engineer was no longer needed. The letter referred to the meeting of the previous day where it was discussed why the position was made redundant and that there were no redeployment opportunities. The letter then stated that due to the position of the business they were not in a position to pay the full redundancy amount.

[11] The letter stated that Underground Services had decided to apply for a reduction of the redundancy pay through the Commission.

[12] The letter concluded by advising that Mr Balnaitis’s employment had ended on 12 September 2016 and that he would be paid four weeks wages in lieu of notice.

[13] It is not dispute that Mr Balnaitis’s employment ceased on 12 September 2016.

[14] Next, on 20 September 2016, due to unforeseen circumstances concerning another employee a vacancy became available within the estimating department. Underground Services considered it to be a viable alternative to termination for reason of redundancy for Mr Balnaitis. He was contacted and informed about the opportunity and was asked to come in to a meeting to discuss the role and a return to work.

[15] Mr Balnaitis had previously performed work within the estimating department when he was between projects. The estimating position was within his skill range and abilities and was to be offered on the same pay and conditions as his previous position.

[16] On 23 September 2016 Mr Balnaitis met with Mr Peter Rowles, the Executive General Manager and Mr Wyatt. Mr Balnaitis was offered the role and asked to return back to work the next day to continue his employment. Mr Balnaitis initially declined indicating he had sourced casual employment elsewhere and was planning on returning to Lithuania. The meeting ended with Mr Balnaitis agreeing to think about the offer and come back to Underground Services with an answer.

[17] On 28 September 2016 Mr Balnaitis notified Underground Services he would not be accepting the estimating department position. He indicated he would continue with his casual job and would be returning to Lithuania towards the end of the year. Mr Balnaitis says he was returning to look after a sick relative.

[18] This application by Underground Services was made on 5 October 2016. The application is made on the basis that it is asserted that other acceptable employment has been obtained for Mr Balnaitis not on the basis that the business is unable to pay Mr Balnaitis’s redundancy entitlements.

Submissions

[19] Underground Services viewed the estimating position as other acceptable employment and their application asks the Commission to reduce the redundancy pay entitlement under the National Employment Standards of seven weeks to be reduced to nil.

[20] Mr Balnaitis’s view is that the offer made to him was not on the same overall conditions as his previous position because it was a short term solution. The position was not relevant to the work and position he held previously which was as a Project Engineer doing project management within the operations department.

The legislation

[21] Sections 119 and 120 of the Act are relevant for the purposes of this decision and are set out below.

“Subdivision B—Redundancy pay

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

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.

Consideration

[22] In this matter the Applicant employer, Underground Services, has not sought to rely on their financial circumstances as a reason to reduce Mr Balnaitis’s redundancy pay but rather has argued that the position offered to him as an estimator is “other acceptable employment” for the purposes of section 120 of the Act.

[23] The case law on this issue is well-developed. Whether other employment is “other acceptable employment” is an objective question not determined by the employer’s or the employee’s opinion. Factors that are likely to be relevant in considering this question include the nature of the work to be done, the rate of pay, hours of work, skills, duties, seniority and location of the work when compared to the position that was made redundant. The onus is on the Applicant, in this case Underground Services, to satisfy the Commission that they have obtained the other employment and that it is “other acceptable employment”.

[24] In this instance there is very little evidence before the Commission about the factors mentioned above and consequently it is practically difficult for the Commission to properly compare the redundant position of Project Manager to that of the estimator position. From the limited evidence available it is apparent that both positions are with the same employer and that Underground Services intended the pay and conditions to be the same. These factors weigh in favour of concluding the estimator position was “other acceptable employment”.

[25] It is clear though that the estimator position is a significantly less senior role than that of Project Manager which is a factor that weighs against concluding the estimator position was “other acceptable employment”.

[26] In this case Mr Balnaitis was terminated on 12 September 2016 but the offer of other employment was not made before he was dismissed. Rather the offer of other employment was made on 23 September 2016, 11 days after the employment relationship had been ended. The offer was made after Mr Balnaitis had left the business. Mr Balnaitis by this time had obtained other casual employment and had made a decision that he would return to Lithuania at the end of the year to care for a sick relative. In this unusual case the circumstances of Mr Balnaitis at the time the offer of other employment was made to him are also relevant factors the Commission should consider when determining objectively whether the other employment was “other acceptable employment”.

[27] The estimator position was either only going to last for around three months and so would not have disrupted Mr Balnaitis’s plans to return to Lithuania or alternatively was going to extend beyond the end of the year and would have disrupted these plans. Obviously Mr Balnaitis was quite entitled to make the plans he did to return to Lithuania because these had been made after his employment ended. The period of employment of the estimator position was either relatively short or was going to disrupt his plans and in either case this would be a factor weighing against concluding the estimator position was “other acceptable employment”.

[28] Considering the limited information before the Commission I am not satisfied that Underground Services have discharged the onus upon them to satisfy the Commission that the estimator position is indeed “other acceptable employment”.

[29] Consequently it is my decision that this application will be dismissed and there will be no reduction of the amount of redundancy pay to which Mr Balnaitis is entitled.

[30] An order to that effect will now be issued.

COMMISSIONER

Final written submissions:

Applicant, 25 October 2016.

Respondent, 8 November 2016.

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