Workco Limited T/A Workco Ltd

[2015] FWC 6014

[2015] FWC 6014

FAIR WORK COMMISSION

DECISION

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

Workco Limited T/A Workco Ltd
(C2015/4126; C2015/4127; C2015/4192)

COMMISSIONER WILSON MELBOURNE, 1 SEPTEMBER 2015

Variation of redundancy pay.

[1] WorkCo Ltd, a Horsham based job placement and labour hire organisation has made applications to the Fair Work Commission for a variation to the redundancy pay to be paid to two former employees. Although WorkCo is now trading as Skillinvest, since the applications were made in the name of WorkCo, I refer to the Applicant by that name throughout this decision.

[2] The applications are made in respect of Mr Hamish Gawith, a former labour hire consultant with WorkCo, and Ms Laura Lourensz, a former administration officer.

[3] The applications are made pursuant to s.120 of the Fair Work Act 2009 (the Act), which provides the following;

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.

[4] WorkCo’s submission in each case is that it has obtained other acceptable employment for each of Mr Gawith and Ms Lourensz.

Hamish Gawith

[5] Mr Gawith’s employment commenced with WorkCo Ltd on 24 November 2008 and it ended on 30 June 2015. As a result, he was employed by WorkCo for more than 6 years, but less than 7 years. Therefore, pursuant to the terms of the applicable enterprise agreement (which applies the National Employment Standard), he would be entitled to 11 weeks redundancy pay. 1

[6] When Mr Gawith left the employment of WorkCo on 30 June 2015 he was paid for the time that he had worked and for his accrued entitlements, however no redundancy payment was been paid to him. WorkCo seek that his redundancy pay be varied to nil for the reason that it obtained other acceptable employment for him.

[7] Mr Gawith was employed by WorkCo Ltd as a “General Consultant”, located at WorkCo Limited’s Horsham office, with Mr Gawith referring to the position as a “Labour Hire Consultant”.

[8] The position was a full time one, in which he was required to work 76 hours per fortnight between Monday and Friday.

[9] At the time of the employer’s application, Mr Gawith was remunerated at the rate of $48,913 per year, and classified under the company’s enterprise agreement at level 2.2. In addition, he received payments of 11% superannuation and had access to “15 Excess Hours Leave Days” per year. He had access to a fully maintained motor vehicle; mobile phone and iPad and received a $400 per annum uniform allowance.

[10] Mr Gawith’s position description included that he would promote the Australian apprenticeship system to potential employers and job seekers. In particular, he would organise and coordinate all appropriate documentation associated with the employment of apprentices and promote WorkCo and AusNAC to potential employers considering using the Australian apprenticeship system. The position description emphasises the need to maintain effective relationships with external organisations and the community; to have well-developed written and oral communication skills; as well as knowledge of the Australian apprenticeship system.

[11] In the week commencing 25 May 2015, Mr Gawith was offered an alternative position with WorkCo Limited. This was for the position of “Consultant – Personnel Hire” with Skillinvest, which is the new trading name of WorkCo Ltd from 1 July 2015. The alternative position was to commence on 1 July 2015. WorkCo’s submissions include that all above terms and conditions of Mr Gawith’s previous employment arrangements were to transfer to the offered position. The alternative position would continue to be located from WorkCo Ltd’s Horsham office. WorkCo’s application refers to this position being a “full-time equivalent” position.

[12] The position description for the alternative position indicates an enterprise agreement classification range for the position of between level 2.1 and 3.1. The position description emphasises the need to manage and maintain a caseload of employees, as part of the company’s labour hire services. It emphasises the promotion of Skillinvest services to potential job seekers and employers, and the selection and appointment of suitable labour hire employees and then their placement with host employers. The position description also refers to the need to develop and maintain strong relationships with external stakeholders.

[13] Mr Gawith’s views about the alternative position include that whilst the wage and other employment conditions were the same, he does not consider the roles to be similar. He saw the offered role as being a backward step in his career. He believed the offered role, from his previous experience, held more pressures in regards to certain OH&S aspects, ascertaining wages and employment conditions, and general staff issues. He believed the role would also require servicing some worksites throughout the State which would require more travelling and possibly time away from his family. Mr Gawith’s submissions on these matters include the following;

“I held the position of Labour Hire Consultant for my first three and a half years of employment for Workco. During my last months in this role I was actively looking for other opportunities within the organisation as I was not enjoying my time as a labour hire consultant, and I was fortunate enough to be successful in the Apprenticeship Centre consultants role, which I thoroughly enjoyed.

In late April we found out that this position would not be continued beyond the 30^th of June. And when the Labour Hire position became available at Workco a month later, through another staff member leaving, Mr Kuhne phoned me and asked me to consider the Labour hire position. For me personally, whilst the wage and other employment conditions were the same, I don’t consider the roles to be similar. I see the offered role as being a backward step in my career. The offered role, from previous experience, held more pressures in regards to certain OH&S aspects, ascertaining wages and employment conditions, and general staff issues. These were the issues which led to me leaving the position in the first place which I felt were commonly known. The role, I feel, would also require servicing some worksites throughout the state which would require more travelling and possibly time away from family.”

Laura Lourensz

[14] Ms Lourensz’s employment commenced with WorkCo Ltd on 23 April 2012 and it ended on 29 May 2015. As a result, she was employed by WorkCo for more than 3 years, but less than 4 years. Therefore, pursuant to the terms of the applicable enterprise agreement (which applies the National Employment Standard), she would be entitled to 7 weeks redundancy pay. 2

[15] When Ms Lourensz left the employment of WorkCo on 29 May 2015, she was paid for the time that she had worked and for her accrued entitlements, however no redundancy payment was been paid to her. The first application WorkCo made to the Commission sought that Ms Lourensz’ redundancy pay be varied to nil, 3 however that was subsequently varied to a reduction of 40% in a second application made by WorkCo, with the intention of correcting its initial application.4 WorkCo seek the 40% reduction for the reason that it obtained other acceptable employment for her.

[16] Ms Lourensz commenced employment with WorkCo Ltd on 23 April 2012 on a part-time basis as an Administration Officer - Personnel, being engaged to work 30.4 hours a fortnight. She worked from the WorkCo Horsham office.

[17] Ms Lourensz was remunerated for this work on a pro rata basis, equivalent to an annual salary of $45,343 per year. She was classified under the WorkCo enterprise agreement at level 1.7. In addition to her salary, she received a payment of 11% superannuation.

[18] Her position description refers to her undertaking a range of general clerical and administrative duties, in connection with the WorkCo Recruitment and Personnel functions. Her duties included responding to telephone calls; maintaining relevant databases and records; advertising vacancies and liaising with internal and external clients and candidates about employment vacancies. Ms Lourensz provided the following commentary about her employment with WorkCo;

“I commenced employment with WORKCO Limited in a full time (1.0FTE) contracted maternity leave position as an Executive Assistant, on the 23rd of April 2012. I remained in that role until May 2013, when I commenced working one day per week (0.2FTE) for WORKCO Limited as a part of the Group Training Department, in a role as a project assistant, organising the bi-annual Awards Night. I remained in that role until late October 2013, when I re-commenced one day per week (0.2) in the same Executive Assistant role I commenced my employment with WORKCO Limited in. In May 2014, I accepted the position that I held when my employment ended, being the two days/week (0.4FTE) Administrative Support role in the Personnel/Recruitment Department. I resigned from the 0.2 role as an Executive Assistant in December 2014.”

[19] On 29 May 2015, Ms Lourensz was offered the alternative position of “Administration Officer” within the Training Department of WorkCo Ltd, with the commencement date to be negotiable.

[20] The offer included Ms Lourensz working 76 hours per fortnight, 5 and continuing to be located at WorkCo Ltd’s Horsham office.

[21] Given that the alternative position was offered on the basis of 76 hours per fortnight and that the position she held immediately before the offer was on the basis of 30.4 hours per fortnight, 6 there would be a significant increase in the hours worked by her.

[22] The salary offered for the alternative position was to be $38,850 per annum, and was classified at an “EBA level 1.1-2.2”. The position description refers to the position being in the Training Department, reporting to the Training Manager, Compliance Coordinator and Training Department. The duties referred to in the position description refer to responding to training enquiries and managing enrolments for training; maintaining relevant databases and attendance and training records and reporting on that data; and raising claims and invoices.

[23] Ms Lourensz’s views about the alternative position offered to her include that what was offered was not equivalent to her existing position. Firstly, she considers she will be required to work five days each week as opposed to two. Secondly, she submits that there would be a reduced salary for the alternative position. The difference in the annual salary for the two positions is $6,493 per year, with the reduction to be incurred by Ms Lourensz to be lower than that amount, with payments to her being prorated according to the number of hours actually worked.

Consideration

[24] The principles relating to the variation of redundancy pay for reason of an employer finding acceptable alternative employment are now well established, and have been summarised by Vice President Lawler in the following way;

“[8] In NUW v Tontine Fibres [2007] AIRCFB 1016 (Tontine) a Full Bench of the AIRC considered the meaning of the expression “acceptable alternative employment” in a redundancy provision in an enterprise agreement. It was common for enterprise agreements to reflect award provisions and contain redundancy entitlements that could be reduced if the employer obtained acceptable alternative employment (or some variant of that expression). The Full Bench observed:

“[23] It is well established... that the concept of acceptable alternative employment is to be determined objectively. As noted by a Full Bench in Australian Chamber of Manufacturers v Derole Nominees Pty Ltd:

“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.”

[24] The onus of establishing that the alternative employment in question is acceptable rests with the applicant employer. In order to establish whether the alternative employment obtained by the employer is acceptable it is necessary to have regard to such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and other matters (including the location of the employment and travelling time). ...”

[9] Other employment does not cease to be “acceptable” merely because it is on terms that are less advantageous to that of the terminating position. Tontine makes it clear that there are matters of degree involved.” 7

[25] In the same matter, the Commission summarised the principles regarding redundancy entitlements and the provisions of the Act for a reduction to redundancy pay as follows;

“[22] Subsections 22(6) and (7) reinforce the notion that where there is a “transfer of employment” – a concept defined broadly in s.22(7) and present in this case –recognition of service with the outgoing employer by the incoming employer should disentitle the employee to the NES redundancy payment. That is consistent with the rational in the TCR No 1 Case and the Redundancy Case 2004 because where there is such recognition, there is no “loss of non-transferrable credits” of the sort that is one of the principal, if not primary, matters to which the redundancy entitlement in s.119 is directed.

[23] In summary:

• The purpose of the redundancy entitlement conferred by s.119 is primarily to compensate the employee for loss of non-transferrable credits, especially long service leave.



• It is not the intention of s.119 to fully compensate the employee in all or even most cases. The specified amounts are manifestly inadequate for that purpose.



• The redundancy entitlement in s.119 has no “income maintenance” purpose and is not intended to address the requirement to search for another job and/or to tide over an employee during a period of unemployment albeit that the it should be regarded as having a minor component referable to the inconvenience and hardship associated with redundancy.



• To the extent that alternative employment is “obtained” by the outgoing employer, matters referred to Tontine (obvious including elements such as the work being of like nature; the location being not unreasonably distant; the pay arrangements complying with award requirements) are relevant in assessing whether that employment is “acceptable” which is in turn relevant in assessing what, if any, reduction is appropriate. [Note that in Tontine, the alternative employment was with the same employer and there was no loss of continuity or non-transferrable credits. Nevertheless, the alternative employment, while assessed as “acceptable” still had material disadvantages that rendered it appropriate to award a portion of the entitlement.]



• Where there is no continuity of employment or recognition of long service and other non-transferrable credits that were not paid out by the outgoing employer then the employer should be entitled to the majority of the s.119 entitlement. To the extent that the alternative employment is disadvantageous when compared to the previous employment that will also sound in lesser reduction than might otherwise have been the case.” 8

[26] Because of the particular circumstances of the two individuals involved and that WorkCo offered each employment within the company, it is unnecessary to consider whether the ongoing employment was obtained.

[27] In Mr Gawith’s case, the offer made was for him to move into another position within the same company with no change to the salary that he would be paid or the hours he worked. However, from his perspective the position was somewhat less desirable than the one in which he had been working, firstly for reason of it potentially being “a backward step in his career” and also because it was likely to take him away from his home and his family on a more significant basis than the position in which he had been employed.

[28] At the time Mr Gawith left employment, he was paid his accrued entitlements, and it is relevant to note that under the relevant enterprise agreement long service leave is as provided for in the Long Service Leave Act (Vic), with the agreement providing that;

“An Employee who ceases employment after 5 years continuous service becomes eligible for pro rata entitlement to long service leave.” 9

[29] I am satisfied from the material before me that it can be said that the ongoing work offered to Mr Gawith was of a broadly like nature. Further I am satisfied the conditions upon which the work was offered were not dissimilar to those from which he came. The disadvantages of accepting the alternative position included that the job was a “backward step” and that additional travel would be required. Such disadvantages as may be said to stem from accepting the offer made by WorkCo do not accumulate to the point that it should reasonably be said that the position offered was not “other acceptable employment”.

[30] As a result, I am satisfied that a reduction in the manner sought by WorkCo is appropriate in Mr Gawith’s case, and an order will be issued reducing the redundancy pay to which he is entitled to nil.

[31] In Ms Lourensz’s case, the offer made to her was a position that was materially different from the arrangements under which she worked prior to being terminated by WorkCo. The position she held with WorkCover immediately prior to dismissal required her to work 30.4 hours per fortnight. The position that was offered to her, while having broadly similar duties, but in a different department within WorkCo, would require her to work 76 hours per fortnight, more than double the hours she had been working. The offer made to Ms Lourensz would also require her to work each week day, instead of two days each week. I am satisfied that objectively such would be a significant difference to her working arrangements, such that it would not be “other acceptable employment”.

[32] Why precisely the additional hours needed to be offered, or why Ms Lourensz was not prepared to work them has not fully been explained to the Commission. There may well be good reasons as to why the parties hold their respective positions, however neither party has fully explained why they hold their views.

[33] The disadvantage that Ms Lourensz would have suffered from accepting the alternative employment would be not only the move to another department, but the requirement to work longer hours in the course of each fortnight. Overall though, I am satisfied that there would have been more disadvantage to Ms Lourensz than advantage in accepting the offer of employment in another department with WorkCo and that it is therefore not appropriate to make a reduction of some kind to the redundancy pay required to be paid to her. I take into account the WorkCo submission that on termination, it paid to Ms Lourensz three weeks pay in lieu of notice.

[34] As a result I refuse WorkCo’s application to vary the redundancy payment due to Ms Lourensz.

[35] Orders consistent with the foregoing will be issued at the same time as this decision.

COMMISSIONER

 1   Skillinvest Group Enterprise Agreement 2013, AE403953, see cl. 92; see also Fair Work Act 2009, s.119

 2   Ibid

 3   C2015/4126

 4   C2015/4192

 5   Submission of Applicant, 30 June 2015

 6   Ibid

 7   Datacom Systems Vic Pty Ltd v Rasiq Khan; Siddharth Desai[2013] FWC 1327, at [8] – [9]

 8   Ibid, at [22] – [23]

 9   Skillinvest Group Enterprise Agreement 2013, cl. 75

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