s 120 - Redundancy pay

Application by Volunteer Centre Of Western Australia Inc Trading As Volunteering WA

Variation of redundancy pay - alternative work offered - redundancy reduced to $5,233.46

• [1] The Volunteer Centre of Western Australia Inc. (the Applicant) has applied pursuant to s 120(2) of the Fair Work Act 2009 (the Act) to have the Fair Work Commission (the FWC) reduce the redundancy entitlement of Ms Tara Doyle from $18,736.92 to $5,233.46.

• [2] Section 120 of the Act confers on the Commission a discretion to reduce the amount of redundancy pay to which an employee would otherwise have been entitled under s 119 of the Act.

• [3] Section 120(1) states that the section applies if an employee is entitled to be paid an amount of redundancy pay under s 119, and the employer 'obtains other acceptable employment' for the employee. These are the jurisdictional facts that must be established before the Commission may exercise its discretion. Section 120(2) then states that the Commission 'may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that the FWC considers appropriate'. If the Commission makes an order under s 120(2), the amount of redundancy pay to which the employee is entitled is the reduced amount specified in the determination (see s 120(3)).

• [4] In the present matter, the Applicant has obtained an alternative position for Ms Doyle, albeit at a lesser rate of pay. The previous annual salary for Ms Doyle was $88,575 in her role as Executive Manager Business Operations whereas the new role - Senior Manager Corporate Services - attracts an annual salary of $63,835. I note that the new role involves slightly less hours per week and this reduction in working time accounts for a reasonable portion of the difference. It appears that the roles are similar in terms of levels of responsibility and task sophistication, and Ms Doyle's continuity of service will be maintained.

• [5] An appropriate approach to consideration of an application under s 120 was set out by a Full Bench of the Commission in Australian Commercial Catering Pty Ltd v Powell and Togia; Powell v Australian Commercial Catering Pty Ltd where the Full Bench found as follows (citations removed):

"[35] In considering an application made by an employer under s.120, the Commission must first consider whether either of the circumstances set out in paragraphs (a) or (b) of s.120(1) applies. Consideration under s.120 is enlivened upon an application being made by the employer for a reduction in the amount of redundancy pay otherwise payable under s.119. In dealing with such an application, the Commission must first determine whether the pre-conditions for the application of the section set out in s.120(1) are satisfied - that is, that the employee the subject of the application has an entitlement under s.119 to redundancy pay, and that the employer has either obtained other acceptable employment for the employee or cannot pay the redundancy entitlement."

"[37] In relation to s.120(1)(b)(i), whether alternative employment obtained by the employer is "acceptable" is to be determined objectively, not by reference to whether the employment is subjectively acceptable to the employee. The determination of whether alternative employment is acceptable requires an assessment and value judgment on the part of the decision-maker. The employer "obtains" other acceptable employment when it acquires or gets the employment by its conscious, intended acts."[1]

• [6] As to the proper test to be applied to determine if the position obtained by the employer is acceptable alternative employment, in Clothing & Allied Trades Union of Australia v Hot Tuna Pty Ltd a Full Bench of the Australian Conciliation and Arbitration Commission stated as follows:

"...the test of acceptability of the alternative employment is an objective one involving a consideration of such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and other matters."[2]

• [7] In the present matter, Ms Doyle has indicated via email that she has willingly accepted the new role and has no issues with the Commission making the order sought. Nevertheless, as set out above the test is not whether the employee finds the position subjectively acceptable. Rather, the FWC needs to make a proper analysis of whether acceptable alternative employment has been obtained. In this instance, I am satisfied that the employment has been obtained by the Applicant. I am also satisfied that service will be continuous and that the seniority and tasks of the new role are within the ambit of acceptable alternative employment. There is also no suggestion that there will be a change to hours of work or job security.

• [8] However, the discrepancy in salary between the two positions is significant and this must be factored into my consideration. In most circumstances such a discrepancy would suggest that the new role is not acceptable alternative employment. Notwithstanding this, I am prepared to accept that in all of the circumstances the new role can be said to meet the definition of acceptable alternative employment.

• [9] The Applicant is seeking an order that would result in a part payment of redundancy, in an amount equal to the weekly difference in pay for the full redundancy period. That amount is $5,233.46. In the circumstances I find that this part payment of redundancy should be made in recognition of the reduction in the rate of pay resulting from the new position and I so order.

[1] Australian Commercial Catering Pty Ltd v Powell and Togia; Powell v Australian Commercial Catering Pty Ltd [2016] FWCFB 5467.

[2] Clothing & Allied Trades Union of Australia v Hot Tuna Pty Ltd (1988) 27 IR 226 (Munro and Peterson JJ, Leary C) at [230]-[231].

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