Vicstaff Pty Ltd (t/as Stratco) v May
[2010] FWA 3141
•21 APRIL 2010
[2010] FWA 3141 |
|
DECISION |
Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay
Vicstaff Pty Ltd T/A Stratco
v
Bradley May; Malcolm McFerran
(C2010/3122)
COMMISSIONER BISSETT | MELBOURNE, 21 APRIL 2010 |
Application to vary redundancy pay for other employment.
[1] This is an application under s.120 of the Fair Work Act 2009 (the Act) to vary the redundancy pay otherwise due under the NES on the grounds that the employer has obtained other alternative employment for the two affected employees.
[2] The applicant employer is Vicstaff Pty Ltd trading as Stratco (Vicstaff). The application relates to two employees – Mr Bradley May and Mr Malcolm McFerran (May and McFerran).
[3] The application was lodged on 10 March 2010 and heard on 24 March 2010 with the parties provided with further time to lodge additional material.
Background
[4] On 10 March 2010 Vicstaff made an application to Fair Work Australia:
1. That Fair Work Australia makes a determination that the amount of severance payment payable to the Respondents by the Applicant is nil; or
2. That Fair Work Australia makes a determination that the amount of severance payment payable to the Respondents by the Applicant is reduced to a specified amount that Fair Work Australia considers appropriate in the circumstances.
[5] The grounds on which the application was made are, in summary, that Vicstaff obtained suitable alternative employment for the respondents which were of comparable nature to their previous roles, were for a comparable or better rate of pay and were within the competencies of the respondents.
[6] Vicstaff manufactures metal goods at its Kilsyth plant in Victoria. They also, until recently, directly employed drivers to deliver goods to customers. 1 May and McFerran were employed by Vicstaff as drivers at the Kilsyth plant.
[7] In early February 2010 Vicstaff determined to contract out its delivery services to a third party. 2 This meant that the work done by May and McFerran was no longer required to be done and their positions became surplus to requirements. Vicstaff no longer required the work done by the two drivers to be done by anyone.
[8] Whilst there is some difference in views between Vicstaff and May and McFerran as to events leading up to their termination, it appears that the company advised May and McFerran on 11 February 2012, in separate meetings, that the trucking functions they each performed were to be contracted out and ‘that their positions would be made redundant in the near future.’ 3 Each was also advised the ‘the Company was able to offer alternative positions to them, being the role of Day Shift Operator and Afternoon Shift Operator.’4
[9] Each of the drivers was also provided separately with a letter confirming that the truck driving positions were redundant and advising that alternative positions of production team member on either the day or afternoon shift were available at their current hourly rate. The letter also advised that the production positions were being offered to another team member (ie the other driver) and sought that confirmation of interest in either of the positions be provided by 15 February 2010. The letter stated that if both drivers were interested in the same position the company would determine who was best suited to each position. Failure to accept a position, the letter advised, would result in cessation of employment. 5
[10] Neither May nor McFerran attended work on 15 February 2010. There is a disagreement between the applicant and respondents as to whether the applicant was advised of this on 12 February or 15 February 2010. This is not materially relevant to these proceedings.
[11] Both May and McFerran met with Vicstaff management on 16 February 2010. Mr Porter, for Vicstaff, gave evidence that at this meeting both May and McFerran advised that they would not accept the positions offered, they believed they were entitled to redundancy pay and that they would resign their positions. 6 May and McFerran deny they said they would resign. At a further meeting with the company on 17 February 2010 May and McFerran confirmed that they would not accept the positions offered and that they would not be resigning.7
[12] Between 16 February and 3 March 2010 when the employment of each of May and McFerran was terminated there were a number of meetings with the company and a range of absences from work. Again there is a disagreement about certificates provided for absences but none of this is relevant to the matter to be decided and has not had a bearing on the decision I have made.
The redundant positions and the new positions
[13] Each of the respondents was a truck driver. In his affidavit Mr Porter explained that:
As drivers, Mal and Brad would generally start work between 4.00am and 6.00am depending on the workload for the day. When they arrived at work, each driver was required to check the contents that had been preloaded onto their delivery truck, collect run sheets for the day and determine an appropriate delivery route. Once at a delivery destination, the drivers were required to unload the vehicle, either by hand or by crane. Their role also involved some customer service, in that they were required to provide paperwork to the customer, ensure the customer signed the paperwork and make sure that the customer was happy with the material delivered, Mal and Brad were expected to have basic numeracy and literacy skills.
Mal and Brad would usually return to the Kilsyth site after lunch-time each day. However, their return to the site depended largely on the number of deliveries that were required each day. The drivers could work up to 10 hours per day, with all hours after 7.6 hours per day being paid at overtime rates. When we were really busy, usually toward the end of the year, sometimes Mal and Brad worked up to 12 hours each day.
Mal and Brad did a good job in their role as delivery drivers for the Company and I had no complaints about their performance. 8
[14] The positions offered to May and McFerran were:
- Production team member on day shift; and
- Production team member on afternoon shift.
[15] The functions performed in each of these roles was explained:
…the Day Shift Operator is required to operate the Roll Form machine, which requires the loading of coils and feeding of those coils through the machine. The operator is required to set the Roll Form machine based on each particular order. There are basic numeracy and literacy skills involved in this role given the work with the machine. 9
…the Afternoon Shift Operator is responsible for the operation of the Roll Form machine. It is my understanding that both Mal and Brad would have the necessary abilities to perform the duties of the Afternoon Shift Operator, which requires basic numeracy and literacy skills and general capacity to operate machinery within the factory. 10
Statutory provisions
[16] 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. 11 The NES must not be contravened by an employer.12
[17] 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. 13 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.14
[18] 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. 15 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.
[19] The applicant relies on paragraph (b)(i), that is that it has obtained other acceptable employment for the two employees concerned.
[20] The relevant modern award is the Road Transport and Distribution Industry Award 2010. 16 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.
[21] 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 17 (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. 18
[22] 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
[23] There is no question that Vicstaff have ‘obtained’ other employment for May and McFerran. The matter for decision here is whether or not that employment is acceptable.
[24] Matters relevant to determining if other employment obtained by the employer for the employee is ‘acceptable employment’ was considered in 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. 19 (emphasis added)
[25] In Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd 20(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.
[26] Not all of the matters identified in Hot Tuna necessarily require consideration in each and every application – some will have greater or lesser applicability based on the facts in the case.
[27] In Von Bibra Robina Autovillage Pty Ltd 21 (Von Bibra), Richards SDP found that:
…the objective test of acceptability appears to be that the alternative work bears a sufficient comparability to the original work and is not unreasonably removed from the employee’s original duties, skills set, qualifications, experience and other terms and conditions of employment. The test is not whether or not the employee is capable of carrying out the new employment as such, it is whether there is sufficient correlation between the relevant indicia of the current work and the alternative employment as proposed. 22
[28] The approach taken in Von Bibra is not inconsistent with the decision in Hot Tuna.
[29] 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. 23 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.24 The reasons for the acceptance of alternative employment are many and varied and general conclusions should not be drawn from a particular circumstance.
[30] 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. Had the alternative work been considered acceptable to the individuals one imagines they would have accepted the work offered.
[31] In many cases considered, and that were referred to me, the alternative work to be undertaken was of the same or a very similar nature – clerical workers remained clerical worker– though with a different employer; 25 manufacturing workers remained manufacturing workers – again with a different employer;26 inbound customer service workers continued to do phone-based customer service work – although with a different bonus structure applicable to the work.27
[32] In this case the actual work proposed as ‘other acceptable employment’ is of a substantially different nature to the work previously undertaken. The alternative employment is that of a production worker. The previous work was as a truck driver. In response to a direct question on the like nature of the work Mr Smith submitted for Vicstaff that the alternative employment offered was of a like nature ‘in the sense of the value of the work that is being offered. It obviously needs to be within the skill sets of the respondents, but it’s a like nature in the sense of the value…’ 28
[33] In written submissions Vicstaff argued that:
- There would be no reduction in wages;
- In relation to the Day Shift Operator position, the hours worked would have been similar, including start and finish times;
- There would be no reduction in seniority;
- The positions offered were within the skills and capabilities of the Respondents;
- There would have been no reduction is [sic] job security as the Applicant required these positions to be filled and must now advertise to fill the positions. 29
[34] In addition Mr Porter, in his affidavit, stated that the truck driving roles and the production roles each involved basic numeracy and literacy skills to undertake the work 30 and that he, Mr Porter, believed that both May and McFerran could undertake the roles.31
[35] Both May and McFerran have either worked in production type positions previously or undertaken some production work at this site. 32
[36] However, the test is not whether the employees could undertake the role; it is whether the work is of a like nature, as enunciated in Derole and Hot Tuna. There must be a sufficient correlation between the relevant indicia of the current work and the alternative employment’. 33
[37] Both May and McFerran dispute the acceptability of the alternative work.
[38] In particular, May said ‘I honestly couldn’t see myself in the factory as a machine/whatever operator. I have been in and out of trucks ever since thirteen, jockey obviously until I got my licence at that point.’ 34
[39] McFerran explained that ‘I came to Stratco to drive a truck, to do deliveries. After being in the warehouse industry for 22 years working night shift and various other shifts, and I went to do driving to actually get out from being within a warehouse because that suited me to pursue my driving career and I basically didn’t want to go back into being confined into a warehouse. If I wanted to become a machine operator I would have pursued that….’ 35
[40] On my request Vicstaff have provided additional information on the average hours worked and wages paid to May and McFerran compared to the average hours worked and wages paid to those in positions similar to those offered as alternative employment. This information was taken and averaged over an eight week period. This data shows:
May | McFerran | Production Day | Production Afternoon | |
Average hours worked | 59.2 | 64.6 | 58.2 | 54.9 |
Average remuneration | 1,327.00 | 1,537.00 | 1,308.00 | 1,284.00 |
[41] I have taken this information into account in making my decision.
Findings
[42] On the material before me I need to determine if, objectively, the employment offered to May and McFerran is acceptable.
[43] With respect to the hours of work the evidence of Mr Porter is that, as drivers, May and McFerran would generally start work between 4.00am and 6.00am. The day production position commenced work at 7.30am though, with pre-shift overtime starting as early as 6.00am. The afternoon production commenced between 1.30pm and 3.30pm. 36 Whilst the number of hours worked was not dissimilar (though about 5 hours per week less for afternoon production work) the pattern of hours is substantially different. Mr May in submissions particularly noted that afternoon shift work would not be suitable given his young family.37 The hours proposed for the alternative employment, particularly the afternoon shift, is substantially altered from the existing hours.
[44] On the basis of the information provided on average wages earned across an eight week period I cannot find that there would be no reduction in wages, particularly with respect to the afternoon shift position. The variation on the figures shown with respect to May and McFerran compared to the production work show variations in earnings between 1.5% and 16%. While I note that Vicstaff say that the hourly rate of May and McFerran will not change it is apparent that their take home pay will change. A disparity of 16% is, in my view, substantial.
[45] Mr May, in his submissions on the matter, recognised that you can’t rely on overtime 38 and ordinarily I would have limited regard for overtime. However, Vicstaff made something of it in both their submissions and evidence that the employment was acceptable. Mr Porter mentioned it in his statement with respect to the truck driving work39 and with respect to the hours of both the day and afternoon shifts.40
[46] It is not clear to me how ‘seniority’ is determined in the company. However, the workplace is relatively small and I do not consider this to be an issue.
[47] Vicstaff claim that the proposed work is within the skills and competence of May and McFerran. The only evidence of this is that the production work requires basic literacy and numeracy skills which each of the employees possess. I have no doubt they could do the work but then, so could many others – assuming they have basic literacy and numeracy skills. This does not in my view make the work acceptable employment in this context. The nature of the work itself is markedly different – from driving to production work.
[48] I do not accept that the ‘like nature of the work’ as identified in Derole can be reduced to a consideration of the ‘value of the work’ as proposed by Vicstaff. To do so reduced the consideration to one of work value and ignores the nature of the work performed. I find that the employment offered by Vicstaff does not have a sufficient connection to the skills of the drivers in their jobs as drivers.
[49] On the basis of the material before me I find that the employment offered is too far removed in terms of hours and the nature of the work currently (prior to the jobs being abolished) being performed. In addition, whilst I note that the employees would remain on their current rate of pay there are questions over the difference in wages that would be received taking into account that overtime.
Should I reduce the amount of redundancy payment to a specified amount?
[50] 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.
[51] 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).
[52] 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.
[53] Having found that the employment obtained is not acceptable, the application to reduce the amount otherwise payable to May and McFerran is also rejected.
Conclusion
[54] I do not consider that the employer has demonstrated that the employment offered to Mr May and Mr McFerran is acceptable employment. The application is therefore dismissed.
[55] The employees should be paid the full redundancy amount owing to them.
COMMISSIONER
Appearances:
L Smith with C Porter for Vicstaff Pty Ltd t/a Stratco
B May representing himself
M McFerran representing himself
Hearing details:
2010
Melbourne:
March 24.
Final written submissions:
8 April 2010.
1 Exhibit V2.
2 Exhibit V1.
3 Exhibit V2, paragraph 9.
4 Exhibit V2, paragraph 9.
5 Exhibit V2, attachment CP1.
6 Exhibit V2, paragraph 20.
7 Exhibit V2, paragraph 21.
8 Exhibit V2, paragraphs 3-5.
9 Exhibit V2, paragraph 11.
10 Exhibit V2, paragraph 13.
11 s.43.
12 s.44.
13 s.55(1) & (2).
14 s.55(4).
15 s.117.
16 MA000038.
17 AIRC, Print J4144 (12 September 1990).
18 Derole, page 2.
19 Derole, page 5.
20 27 IR 226, in particular 230-1.
21 [2007] AIRC 397 (16 May 2007)].
22 Von Bibra at [26].
23 Feltex Australia Enterprise Agreement 2004, Watson SDP, 21 November 2006 [PR974699], at [32].
24 Derole, page 5.
25 Agribusiness Employers Federation,PR900768, 31 January 2001.
26 Feltex Australia Enterprise Agreement 2004, Watson SDP, 21 November 2006, [PR974699].
27 CPSU, the Community and Public Sector Union v Excelior, Smith C, 17 November 2008 [2008] AIRC 784.
28 Transcript PN38.
29 Exhibit V1, paragraph 11.
30 Exhibit V2, paragraphs 11 & 13.
31 Exhibit V2, paragraph 12.
32 Transcript PN173 & 169
33 Von Bibra, [26]
34 Transcript PN147.
35 Transcript PN127.
36 Exhibit V2, paragraphs 3, 11 & 14
37 Transcript PN169.
38 Transcript PN149.
39 Exhibit V2, paragraph 4.
40 Exhibit V2, paragraphs 11 & 14.
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