Underground Services Australia Pty Ltd v James Stark

[2015] FWC 7288

[2015] FWC 7288

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Underground Services Australia Pty Ltd
v
James Stark
(C2015/5858)

COMMISSIONER WILLIAMS PERTH, 23 OCTOBER 2015

Variation of redundancy pay.

Background

[1] Mr James Stark (Mr Stark) was employed by Underground Services Australia Pty Ltd (Underground Services or the applicant) under the terms of the Underground Services Australia Agreement 2015 [AE414217] (the Agreement). Underground Services have applied under section 120 of the Fair Work Act 2009 (the Act) to vary the redundancy pay that would otherwise be payable to Mr Stark.

[2] I am satisfied on the authority of the Full Bench decision in The Maritime Union of Australia v FBIS International Protective Services (Aust) Pty Ltd 1 that the Commission does have the power to reduce the amount of redundancy pay under section 120 of the Act that would otherwise have been payable to Mr Stark under section 119 of the Act because that section of the NES operates in parallel with the redundancy provision provided for in clause 10 −Contract of Employment subclause (f)− Redundancy of the Agreement.

[3] The parties have provided written materials and submissions with respect to this matter.

Factual findings

[4] Mr Stark had been employed by Underground Services for approximately nine years.

[5] By letter dated 15 November 2013 Underground Services offered to Mr Stark, and he accepted, a position at the Cloud Break/Christmas Creek project in the north-west of Western Australia. That letter confirms that for the duration of that project he would receive an hourly rate of $55 per hour and work a 14 day on and 7 day off roster. The letter stated that at the end of this project he would return to his “...previously held metro rate” and that all other terms and conditions of his employment would remain the same.

[6] Early in August 2015 the applicant completed its work on the Cloud Break project and Mr Stark was advised that his position there as a Field Service Mechanic was consequently no longer required.

[7] The evidence is that Underground Services offered Mr Stark two positions they had vacant; one as a Fitter at the Leinster site on a 2 and 1 roster with an all-purpose rate of $33.03 per hour and the other as a Fitter at Mount Keith site again on a 2 and 1 roster with the hourly all-purpose rate of $33.03 per hour. Mr Stark advised Underground Services that he would not accept either of these other employment positions because he was not willing to accept the lower all-purpose hourly rate.

[8] Mr Stark enquired about a possible vacancy at the workshop in Perth but was advised that there was currently no position available there.

[9] At a meeting on 18 August 2015 where all of the above was discussed Mr Stark was advised by Underground Services that as he would not accept either of the positions the company had available for him they would have to terminate his employment due to his position being made redundant. He was advised at that meeting that the company would make this application to the Commission seeking to reduce the amount of redundancy pay.

Consideration

[10] Section 119 of the Act provides an employee is entitled to be paid redundancy pay 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.

[11] Section 120 of the Act is set out below.

“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.”

[12] This section provides that if an employer obtains other acceptable employment for a redundant employee the employee may apply for the Commission to determine whether the amount of redundancy pay should be reduced.

[13] There is a long line of authority which considered the tests to be applied when determining whether an employer has obtained for an employee, what under earlier versions of the legislation was referred to as, “acceptable alternative employment”. I am satisfied that “acceptable alternative employment” should be taken to have the same meaning as the words “other acceptable employment” currently used in section 120 of the Act.

[14] The tests to be applied in determining what is “acceptable alternative employment” are well established. It is a test that is to be applied objectively not subjectively. The decision in Australian Chamber of Manufacturers v Derole Nominees Pty Ltd 2 found that in considering whether alternative employment is acceptable consideration is to be given to whether the work is of a like nature as well as the location, pay arrangements, hours of work, seniority, fringe benefits, workload and job security of the alternative employment.

[15] The alternative employment does not need to be identical nor for it to be broadly comparable to the redundant position. Indeed Senior Deputy President Watson in Feltex Australia Pty Ltd v Textile, Clothing and Footwear Union of Australia 3found that:

“I accept the proposition advanced by Feltex Australia that acceptable alternative employment is not necessarily identical employment and that the AIRC has previously found alternative employment to be acceptable notwithstanding inconvenience to employees and some detrimental alteration to the terms and conditions of employment.”

[16] The facts here are that under the terms of the Agreement, which commenced operation in June 2015, the hourly rate of pay for a Fitter, Employee Grade 3, under clause 16−Hourly Rates of Pay was $20.65 per ordinary hour and the industry allowance provided for in clause 17−Industry Allowance was $0 .75 per hour all-purpose. Clause 3−Definition of the Agreement provides the all-purpose rate to mean the ordinary hourly rate plus the industry allowance. Consequently the all-purpose rate to which Mr Stark was entitled under the Agreement was $21.40 per hour. At the highest under the Agreement if Mr Stark was a Special Class Engineering Construction Trade Person Level I he would be classed as an Employee Grade 5 and receive an hourly rate of $21.88 and in addition to that the $0.75 per hour industry allowance being an all-purpose rate of $22.63 per hour.

[17] Clause 18−Site Agreements of the Agreement provides that where an employee is required to work on a site in which a registered site agreement operates Underground Services will apply such rates and conditions that take account of the site agreement and any arrangements with the client in lieu of the rates and conditions prescribed by the Agreement but that Underground Services will ensure the employee is not a disadvantaged on overall monetary terms compared to what they would receive under the terms of the Agreement.

[18] In short the Agreement provides for all-purpose rates however if an employee is required to work on a client’s site which has different higher rates that apply the employee will receive the benefit of these additional rates whilst working on that site. The offer which Mr Stark accepted to work on the Cloud Break/Christmas Creek project from 2013 was consistent with this provision in the Agreement. The particular rate which will apply under the terms of the Agreement will be dependent upon the particular site at which Mr Stark worked. It is also the case under this clause that if there was no site agreement applying to a particular remote worksite then the all-purpose rates I have set out above from the Agreement would apply.

[19] Mr Stark was not employed on the basis that he would only ever work on the Cloud Break/Christmas Creek project rather this was an opportunity he was offered and accepted whilst it lasted.

[20] While it is understandable that Mr Stark would have been disappointed that he could no longer receive the benefit of the $55 per hour rate he was being paid whilst working on the Cloud Break/Christmas Creek project this was not an entitlement he could reasonably have expected to continue indefinitely. This was a benefit he enjoyed whilst he worked on that project only. The letter of 15 November 2013 expressly made plain that this amount was only payable for the tenure of the project. Indeed this is exactly what has happened, the project has ended and Underground Services were not able to offer work to Mr Stark at any other site paying a similar amount.

[21] When it was clear to the applicant that Mr Stark’s position at Cloud Break/Christmas Creek was redundant they offered him two other positions at other mine sites. Mr Stark was not entitled to expect that he would be offered work at a site paying a rate comparable to that which he had enjoyed at Cloud Break/Christmas Creek. Consistent with clause 18 of the Agreement he could be required to work at any site. The other employment positions he was offered would have paid him hourly rates significantly higher than the minimum all-purpose rates provided for in the Agreement, no doubt as compensation for working in the remote north west of the State. The roster arrangements were consistent with what he had been working since November 2013 and are one of the rosters commonly worked on remote sites. There is no doubt in all the circumstances that considered objectively either of the positions offered to Mr Stark were other acceptable employment.

[22] There is no reason why Mr Stark could not have taken up the other employment positions that were offered to him. In those circumstances then it is appropriate that the amount of redundancy pay that would otherwise have been payable to Mr Stark should be reduced by order of the Commission.

[23] Mr Stark apparently was entitled to 14 weeks of redundancy pay. Underground Services have applied for that amount to be reduced by 5-6 weeks. In the circumstances I think it is more than reasonable for 6 weeks to be deducted from the 14 weeks of redundancy pay and an order will be issued that the amount of redundancy pay that Underground Services is required to pay Mr Stark is reduced to 8 weeks.

COMMISSIONER

Final written submissions:

Applicant, 22 September 2015.

Respondent, 28 September 2015

 1   [2014] FWCFB 6737.

 2   Print J4414.

 3   PR974699.

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