Fair Work Act 2009_

s 120 - Application to vary redundancy pay for other employment or incapacity to pay

Application to vary redundancy pay - contract catering industry - acceptable alternative employment - no change to wage rates or conditions - additional travel time - alternative employment reasonable - redundancy pay reduced to nil - determination made.

[1] Spotless Services Australia Pty Ltd (the 'applicant' or 'Spotless') has filed an application, pursuant to s 120 of the Fair Work Act 2009 (the 'Act') to vary redundancy pay in respect to two former employees, Ms Catherine McLeish and Ms Marilyn Thompson (the 'employees') who were offered alternative employment. The background facts to this matter are relatively straightforward. Both employees were employed at the Tomago Aluminium site at Tomago, New South Wales, where the applicant had a contract for providing various services which included catering. Both employees were employed at the site under the Hospitality Industry (General) Award 2010 [MA000009] (the 'Award').

[2] Ms McLeish was employed from 29 September 1997 as a Catering Attendant working 27.5 hours per week at an hourly rate of $17.52 (at the time of termination). Ms Thompson commenced employment at the site on 15 December 2010 as a Catering Attendant working 25 hours per week at the same hourly rate. The employees worked at night and on weekends. Both employees travelled to and from work in their private cars, from their homes in Rutherford, New South Wales.

[3] On 11 March 2013, the employees were informed that, as a result of changed requirements by Tomago, there would need to be a reduction in catering hours provided by Spotless at the site. It was indicated to them that alternative locations for re-employment were being investigated at other sites where Spotless provided catering and other services.

[4] On 22 March 2013, and again on 5 April 2013, the employees were informed that alternative work had been identified for them at Eraring Power Station, Eraring, New South Wales. Importantly, they were to be re-employed in the same roles, with the same hours and rates of pay. They were also offered cleaning roles at Greenhills Stockland (Ms McLeish) and Jesmond Stockland (Ms Thompson). The cleaning roles were rejected as not comparable.

[5] However, the employees declined the offers of re-employment at Eraring, citing the additional distance and time required to travel to the new location. Using Google Search, Spotless assessed the distance from:

a) Rutherford to Tomago as 25.1km, taking 25 minutes; and

b) Rutherford to Eraring as 53.7km, taking 50 minutes.

[6] On this basis, it was assumed the employees would have a net additional travel time to Eraring of 25 minutes each way; effectively doubling the time they had previously travelled to Tomago. Spotless maintains that the additional travel time was not unreasonable and the offers of re-employment therefore constituted acceptable alternative employment. In these circumstances, Spotless seeks to be relieved from paying redundancy pay to the employees, in accordance with the provisions of s 120 of the Act.

[7] The matter was initially listed for directions on 9 May 2013 and listed for hearing on 28 June 2013. Directions for the filing of evidence and an outline of submissions had been complied with by the applicant. However, the employees filed no evidence and no submissions, although no point was taken by Spotless in this respect. In any event, there appears to be only one issue of factual contest between the applicant and the employees. Contrary to Spotless' estimate of the time to drive from Rutherford to Eraring as being 50 minutes, the employees time trialled the distance on a single occasion, at one hour and fifteen minutes. They left Rutherford at 7:50am and arrived at Eraring at 9:05am.

[8] Spotless relied on an unchallenged statement from Mr David Horder, Operations Manager, who had been directly involved in negotiations with the employees as to their terminations of employment and offers of re-employment. In addition to the factual matrix, Mr Horder referred to a contract of employment with Ms Thompson, dated 10 December 2010, which relevantly provided at cl 4:

This position is located at Tomago Aluminium Co Pty Ltd, Tomago Road, Raymond Terrace NSW 2324

The location of your employment may change in accordance with the Company's business needs. Any proposed changes will occur in full consultation with you.

If relocation requires you to move to a new region, interstate or overseas, then you will be reimbursed reasonable relocation expenses in accordance with the applicable Company Policy.'

[9] While Mr Horder could not locate a similar contract for Ms McLeish, he assumed her terms and conditions of employment were on a similar basis. Mr Horder said that as a result of refusing the offers of employment, the employees' employment was terminated by letters dated 23/24 May 2013 for reasons of redundancy. At the same time, Mr Horder advised the employees of this s 120 application to the Commission, that no redundancy pay be paid.

[10] In supporting submissions, Mr J Douglas, for the applicant, put that the only issue for the Commission to determine was whether the offer of reemployment at Eraring was 'acceptable employment' within the meaning of s 120 of the Act and, if so, whether the redundancy pay, otherwise payable, should be reduced to a figure of zero or some lesser amount than that prescribed in s 119(2) of the Act.

[11] Spotless conceded that the applicant bears the onus of satisfying the Commission that the relevant offers of re-employment constitute 'acceptable employment'. He relied on the following authorities in support of the applicant's contentions; See: Australian Chamber of Manufactures v Derole Nominees Proprietary Limited [1990] AIRC 980; (1990) 140 IR 123; Feltex Australia Pty Ltd v Textile, Clothing and Footwear Union of Australia PR974699; Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd (1988) 27 IR 226; National Union of Workers v Linfox Australia Pty Ltd [2008] AIRC 647; and Re Rubber, Plastic & cable Making Industry (Consolidated) Award 1983 [1989] AIRC 528; (1989) 31 IR 35.

[12] The legislative provisions relevant to this application are to be found in ss 119 and 120 of the Act as follows:

(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.

(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:

Employee's period of continuous service with the employer on termination

120 Variation of redundancy pay for other employment or incapacity to pay

(a) an employee is entitled to be paid an amount of redundancy pay by the employer because of section 119; and

(i) obtains other acceptable employment for the employee; or

(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.'

[13] In a recent decision of Lawler VP in Datacom Systems Vic Pty Ltd v Rasiq Khan; Siddharth Desai [2013] FWC 1327, His Honour considered the expression 'acceptable alternative employment'. The additional word 'alternative' means the same as the words of subsection (b) of s 120(1):

(i) obtains other acceptable employment for the employee'.

'[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.'

See also: Football Queensland Ltd v Lonton [2013] FWC 2578.

[14] A number of principles may be distilled from these and other relevant authorities as to the principles to be applied by the Commission when considering an application under s 120 of the Act. These include, inter alia:

the determination of what constitutes acceptable alternative employment is an objective exercise;

mere rejection by the employee of alternative employment does not make it objectively unacceptable;

comparable or equivalent pay and conditions, including hours of work and continuity of service are important and relevant considerations;

to be acceptable, the new employment would need to take account of the employees' skills, seniority, experience and capacity to perform the job;

the location and additional travel times to and from work are a relevant consideration. For example, an offer of reemployment to another State would not ordinarily be found to be 'acceptable employment';

'acceptable employment' need not be identical employment and may still be considered acceptable, notwithstanding there might be additional inconvenience or a detrimental alteration to the terms and conditions of employment;

employees should not unreasonably refuse offers of alternative employment merely because they wish to access the benefits of redundancy pay.

[15] At the outset, I make these preliminary uncontested findings:

• there is no doubt the employees were made redundant and, in ordinary circumstances, would be entitled to the benefits of the Award or the National Employment Standards' provisions in respect to redundancy pay;

• there is no suggestion that the applicant did not properly engage with and consult the employees as to the need for redundancies and the capacity for Spotless to minimise the impact of the redundancies;

• the applicant investigated various options and found alternative work for the employees; and

• the alternative employment was for the same pay and conditions they had previously enjoyed. It might be said to have been identical employment, save for the one contested issue: the additional distance and time taken to travel from home to Eraring.

[16] Simply put, Spotless maintains that an additional travel time of 25 minutes each way is not unreasonable. The employees dispute this assessment and contend that the additional time is close to double that calculated by Spotless. Before determining whether the additional time (be it 25 minutes or 50 minutes each way) is objectively reasonable, I make the following further observations about the employees' objections.

[17] Firstly, as a matter of simple logic, the time taken to travel any distance by car will depend on numerous factors, including time of day, area or location, weather and road conditions and the type of vehicles driven. The evidence was that the employees worked weekends and at night. They were plainly driving in a semi rural location to and from work, although it seems that it was necessary to drive through Maitland, where it was said there were major roadworks for a bypass being presently constructed. It follows, that if the employees conducted their trial run during the day or in peak periods, it is likely to result in additional time. In fact, they had driven the distance to Eraring from 7:50am to 9:05am in what was undoubtedly peak time. No other trials were undertaken.

[18] Moreover, on completion of the Maitland bypass, it must reasonably be assumed to result in improved travel times. In addition, it must also be acknowledged that road travel times in semi rural areas are not going to be as great as travelling the same distance in the Sydney or Newcastle metropolitan areas. In my view, while I do not doubt the sincerity of the employees, their estimation of additional travel time is somewhat exaggerated. I accept Spotless' more objective assessments, based on Google Maps, of the additional time taken between Rutherford and Eraring compared to Rutherford and Tomago to be around 25-30 minutes each way. In conducting my own independent inquiry of Google Maps, the distance between Rutherford and Eraring is said to be 58.8km , taking 53 minutes by car, with traffic.

[19] Secondly, the industry in which the employees worked is notorious for the winning and losing of contracts. So much is plainly evident from the contract of employment signed by Ms Thompson in 2010. While I appreciate the employees' reluctance to change work locations after having worked at the same site for many years, the fact is that the nature and characteristics of the contract catering industry make it an inherently unstable one, in which long term employment at one site is more the exception than the rule. Thirdly, ultimately, even accepting the employees' estimate, the difference between the applicant's assessment and the employees' trial is 25 minutes each way (50 minutes versus 1 hour, 15 minutes).

[20] That said, I return to consider whether the additional travelling time made the offer of reemployment objectively unacceptable alternative employment. While I sympathise with the extra inconvenience and cost the employees would have been required to accept, particularly in the context of their relatively low wages and part time hours, I am unable to conclude that a daily travel time of around 1 hour and 40 minutes return trip, or an additional travel time of 50 minutes return, constitutes a sufficient basis for refusing the offer of reemployment at Eraring.

[21] Accordingly I find the offer of reemployment to Eraring was 'acceptable employment' within the meaning of s 120 of the Act. Given this finding, the onus on the applicant to demonstrate that its offer of re-employment was 'acceptable employment' has been discharged. I consider that no amount of redundancy pay is applicable in these circumstances. The application is granted and a determination to that effect will be issued contemporaneously with this decision.

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