White Cloud Trading Pty Ltd T/A Tree of Life v Caitlin Gibson

[2014] FWC 3566

[2014] FWC 3566

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

White Cloud Trading Pty Ltd T/A Tree of Life
v
Caitlin Gibson
(C2014/4044)

COMMISSIONER BULL SYDNEY, 6 JUNE 2014

Redundancy - application to vary NES entitlement, whether employer obtained other acceptable employment for employee. Redundancy entitlement reduced in part.

[1] In this matter, White Cloud Trading Pty Limited (the Applicant) which trades as the “Tree of Life”, a retail outlet, seeks relief from its statutory obligation to make a redundancy payment to its previous employee Ms Caitlin Gibson (the Respondent).

[2] The application was made on 14 April 2014 pursuant to s.120(2) of the Fair Work Act 2009 (the FW Act) which provides the Commission with a discretion to reduce or remove an entitlement to redundancy pay should the Commission consider it appropriate. Section 120(2) of the FW Act is couched in the following terms:

120(2) On application by the employer, FWC may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that FWC considers appropriate.

[3] Section 120(2) of the FW Act applies where the terms of s.120(1) are met:

120(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.

(my emphasis)

[4] The Commission was not advised of any enterprise agreement that applied to Ms Gibson’s employment. Consequently, as a Manager in a retail store, the redundancy provisions of the General Retail Industry Award 2010 (the Modern Award) would apply. Clause 15 Redundancy of the Modern Award provides that the redundancy benefits provided under the National Employment Standards (NES) are applicable. Ms Gibson was employed by the Applicant for a period of nine years hence the Modern Award’s transitional redundancy provisions have application. Sub-clause 15.5 Transitional provisions - NAPSA employees of the Modern Awardprovides that the redundancy pay entitlement that would have applied in accordance with a notional agreement preserving a State award are to have effect where they are in excess of the NES.

[5] On examining the Shop Employees (State) Award (NSW) (the State Award) its redundancy provisions do not provide in Ms Gibson’s case for any additional payment. Both the State Award and the NES provide for a payment of 16 weeks redundancy where nine years continuous service has been completed by the employee.

[6] Section 119 of the FW Act sets out a minimum NES entitlement to redundancy pay for national system employees. The exclusions from redundancy pay provided for in s.121 of the FW Act were not raised in this application.

[7] The Applicant’s Retail Operations Manager, Mr Francis Borthwick, appeared for the Applicant and the Respondent’s mother, Ms Susan Gibson, represented the Respondent.

Applicant’s submissions

[8] The Respondent’s employment terminated on 9 May 2014. The Applicant does not submit that it does not have the capacity to pay the amount of redundancy due, but argues that it obtained other acceptable employment for the Respondent which was declined.

[9] Mr Borthwick tendered a witness statement, gave evidence, and made submissions. Mr Borthwick told the Commission that he had 47 stores to manage.

[10] The Applicant submitted that it should not be liable for redundancy payments because the Respondent chose not to accept an offer of acceptable employment. The Applicant stated that based on the grounds put forward by the Respondent it was unreasonable for the Respondent to reject the offer of employment from the Applicant in order to receive a redundancy payment.

[11] On 22 March 2014, Mr Borthwick approached the Respondent at the Bondi Junction Tree of Life store where Ms Gibson worked as the Manager on a 32.5 hour week. Mr Borthwick advised Ms Gibson that it was not feasible that as the Manager she only work a 32.5 hour week. Ms Gibson was asked whether she would be able to increase her hours to 38 per week to meet the store’s operational needs, upon which she indicated she was not able to do so.

[12] A number of offers of alternate employment were put to the Respondent of which all were refused. The final offer which was not accepted by her was the offer of a management role at the Applicant’s store in the Sydney CBD on the same pay and working conditions as her position at the Bondi Junction store. This offer was put in the following terms in a letter to Ms Gibson dated 9 April 2014 by Mr Borthwick:

“...

As discussed the Bondi store requires a full time manager with the move in location and consolidation of stores.

With these facts in mind I will be offering you the Manager position at the Westfield Sydney store which can have a manager working 32 hours.    1

If you accept your contract will be adjusted to reflect the actual arrangement:

32 hour working week on a salary of $62,937.50 pro rata.

...

Please confirm if you would like to proceed with the offer.” 2

[13] Mr Borthwick said that he encouraged Ms Gibson to accept the position offered and that the CBD store had the most expensive fit out of all its stores and while its turnover was less than the Bondi Junction store it was doing well. He disputed that working in the CBD store would affect Ms Gibson’s security of employment.

[14] During this process Mr Borthwick explained that he was attempting to find out what employment arrangement the Respondent was on as no written employment contract existed and payslips stated that Ms Gibson worked a 38 hour week and was paid for 38 hours despite only 32.5 hours actually being worked.

Respondent’s submissions

[15] The Respondent explained that she worked at the Bondi Junction store as the Manager working 32.5 hours per week but was paid for 38 hours per week as a result of a verbal agreement with previous management. This arrangement was reached prior to Mr Borthwick taking up the role of Retail Operations Manager. 3 On 24 March 2014, Mr Borthwick sent the Respondent an email advising that she had been incorrectly overpaid for hours not worked.4

[16] Ms Gibson stated that Mr Borthwick never raised any concerns with her performance or questioned her management ability.

[17] The Respondent’s objection to the reduction of her redundancy entitlement centred on the process involved in her being made redundant. It was said that it was confusing and inefficient resulting in the Respondent being disadvantaged.

[18] The submissions of the Respondent made reference to the unfair dismissal provisions of the FW Act and the requirements of satisfying an argument of a genuine redundancy. It was submitted that a failure to consult meant that it was not a genuine redundancy and that it was an unfair dismissal. 5

[19] In respect of the position at the Sydney CBD store Ms Gibson argued that the CBD store was not equivalent to the Bondi Junction store on the basis that the Bondi Junction store was a “top performing flagship store”. In taking on a position that doesn’t have the same status, her career would be jeopardised. It was submitted the only status associated with the city store is that it is situated in the Westfield Pitt St building. The Bondi Junction store being a high performer meant that budgets were met and resulting bonuses would be paid.

[20] Having previously worked at the CBD store, Ms Gibson believed it was badly positioned, had a history of underperformance and if she were the Manager and was unable to improve its performance it would impact on her future job security.

[21] It was put by the Respondent that by the time the final offer was made to her (after two less favourable proposals for alternative employments had been made and declined), the working relationship had been irreparably damaged by the manner in which the interactions between the Applicant and Respondent were handled including the Applicant questioning the veracity of the Respondent’s working arrangements. Ms Gibson stated that it was not made clear to her that by rejecting the transfer to the CBD store Mr Borthwick would apply to reduce her redundancy entitlement; however she was unable to state that she would have accepted the position with this knowledge.

[22] It was not argued that working in the CBD store would create any disadvantage in terms of travel as compared to the Bondi Junction store.

[23] Ms Gibson in addition to opposing the application submitted that it should be dismissed on the basis that the Applicant did not comply with the Commission’s directions on the due date. While the Applicant’s submissions were filed late and no explanation was provided, it was not argued that this caused any prejudice to the Respondent. Hence the motion to dismiss the application was refused.

Conclusion

[24] Redundancy payments are intended to compensate for the loss of non transferrable credits such as sick and long service leave and other entitlements based on length of service and the inconvenience and hardship imposed on employees. 6 Both parties appear to accept that Ms Gibson’s Manager position at the Bondi Junction store at 32.5 hours per week has come to an end with the Applicant requiring the Manager’s position to work a 38 hour week. The Applicant states that the Respondent’s position is redundant but that an alternate and acceptable position was offered to the Respondent.

[25] Whether the appropriate consultation as required under the General Retail Industry Award 2010 occurred rendering the redundancy not a “genuine redundancy” for the purposes of s.398 of the FW Act is not a matter I need determine as this is not an unfair dismissal application.

[26] It is a serious step to make an order to limit or remove an employee’s statutory entitlements to redundancy pay. The employer must demonstrate that they have obtained other acceptable employment for the employee.

[27] It is well established that the onus lies with the employer who seeks an exemption from redundancy payment obligations. 7

[28] To establish the acceptability of alternative acceptable employment, the test is an objective one, involving a consideration of matters such as hours of work, pay levels, recognition of previous service, fringe benefits, travel to job, workload, job security and other matters. 8

[29] Ms Gibson’s argument that she has been treated unfairly as she was made redundant due to the number of hours she works and not because of her work performance unfortunately does not address the criteria that the Commission needs to consider.

[30] The alternate employment was offered to Ms Gibson on the basis that the full time salary for a manager at the CBD store would be adjusted to accommodate Ms Gibson only working 32.5 hours per week and not 38 hours; however she would still receive the same salary that she received at the Bondi Junction store. In considering factors such as hours worked, the salary level, job security, travel to and from the CBD store and Ms Gibson having worked at the CBD store previously, I am not able to conclude that the position offered was a detriment to Ms Gibson. On an objective basis it must be concluded that the alternate employment position was “acceptable” employment.

[31] However this conclusion by itself does not automatically rescind the Respondent’s entitlement to a redundancy payment. The Commission has discretion to reduce the redundancy entitlement to an amount it considers appropriate. In this case there are a number of factors in favour of the Respondent’s position.

[32] I am prepared to make an adjustment to the redundancy entitlement; the reduction will be a period of 10 weeks, requiring the Applicant to pay the remaining entitlement of six weeks.

[33] As stated I have arrived at this conclusion notwithstanding that I consider the position offered at the Applicant’s city store to be on its face “acceptable employment”.

[34] This is because I accept the Respondent’s argument that the manner in which the offer of an alternate position was handled was confusing and led to the breakdown of the employment relationship detracting from the otherwise acceptable employment offer to another position; examples of this conduct include:

● advising the Respondent in correspondence dated 11 April 2014 that she would be paid her full redundancy entitlement; 9

● not making it clear to the Respondent that declining the CBD role would result in an application to reduce her redundancy entitlement;

● offering the CBD role on a reduced salary in the first instance; and

● suggestions by the Applicant that the Respondent had been overpaid for four years and that payroll fraud may have occurred. 10

[1] The Applicant has satisfied the Commission that the discretion available to reduce or eliminate its redundancy pay obligations to the Respondent should be exercised by reducing the entitlement by 10 weeks to a period of six weeks redundancy pay.

[2] An order will issue reflecting this decision.

COMMISSIONER

Appearances:

Mr F Borthwick on behalf of the Applicant.

Ms S Gibson on behalf of the Respondent.

Hearing details:

2014.

Sydney:

May 22.

 1   The Respondent was previously working 32.5 hours per week at the Bondi Junction store not 32 hours.

 2   Attachment C of Respondent’s submissions of 22 May (Exhibit R3).

 3   See email from Mr Borthwick of 25 March 2014 (Attachment B of Respondent’s submissions of 22 May (Exhibit R3)).

 4   Attachment A of Respondent’s submissions of 22 May (Exhibit R3).

 5   Respondent’s submissions 22 May (Exhibit R3) at 3 and 4.

 6  Termination, Change and Redundancy Case AIRC Print F6230 at 50.

 7  Clothing and Allied Trades Union v Hot Tuna (1988) 27 IR 226.

 8   Ibid at 230-231.

 9   Attachment E of Respondent’s submissions of 22 May (Exhibit R3).

 10   See email from Mr Borthwick to the Commission received 30 April 2014.

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