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[2020] FWC 5894
General information, not legal advice.
Fair Work Commission
2020-11-04
Original judgment source is linked above.
The attached document replaces the document previously issued with the above code on 4 November 2020, to amend paragraph numbering.
s.120 - Redundancy pay
[1] ASG Maintenance Pty Ltd (ASG) has made an application pursuant to s.120 of the Fair Work Act 2009 seeking an order to vary the redundancy pay entitlement with respect to its former employee, Mr Robert Lord. ASG seeks to reduce the amount of redundancy pay Mr Lord is otherwise entitled to be paid to nil, on the basis that it had obtained 'other acceptable employment' for him within its own business for the purposes of s.120(1)(b)(i) but such offer was rejected.
[2] Mr Lord opposes the application and asserts that the positions offered were not acceptable employment.
[3] The matter was heard by telephone on 2 November 2020. Ms Chole Bell (Staffing & Recruitment Manager of ASG) appeared for ASG and Mr Lord appeared on his own behalf. Evidence was given by Ms Bell and Mr Lord and each had filed a witness statement prior to the hearing.
[4] Section 119 of the Act relevantly provides 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.
[5] Section 119 goes on to provide the amount of redundancy pay by reference to the employee's period of continuous service with the employer.
[6] Section 120 of the Act provides:
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, FWC may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that 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.
[7] ASG is a project-based company that supplies labour hire and hydraulic services within New South Wales and Queensland.
[8] Mr Lord commenced employment with ASG in April 2017 as a light vehicle mechanic in its Mudgee (NSW) workshop. He was redeployed in January 2018 to Moolarben Coal Mine as a light vehicle mechanic.
[9] On 11 September 2020 ASG notified Mr Lord that his service at Moolarben Coal Mine was no longer required.
[10] Between 11 September 2020 and 28 September 2020 ASG had several discussions with Mr Lord concerning suitable redeployment opportunities.
[11] ASG subsequently offered Mr Lord two alternative positions, being a Serviceman Mechanic position in Tomingley Gold Operations (the Tomingley position) and a Light Vehicle Mechanic/Serviceman in ASG Equipment Workshop (the Dubbo position).
[12] By email dated 25 September 2020, Mr Lord advised ASG that he was unable to accept either alternative positions due to "the location and previous commitments outside of work".
[13] On 28 September 2020 a final meeting was held to discuss the redeployment opportunities. After this meeting Mr Lord ultimately confirmed that the positions offered were rejected.
[14] Later that afternoon, ASG sent an email to Mr Lord to advise that his employment with ASG was terminated for reason of redundancy. Attached to the email was a letter also dated 28 September 2020 which states in part the following:
"On 11 September 2020 the Client on Project Moolarben OC, finished the light vehicle maintenance services and as such, your employment on that project ended. We spoke to you on 11 September about finding you another position in the company, asking for your input and explaining the nature of the business being project based work.
From 11 September until 28 September, ASG Maintenance Pty Ltd has attempted to find you alternative employment within the company. During this time, in good faith, the company chose to continue paying your base salary up to and including 23 September 2020, given the current economic situation and attempting to redeploy you to another project as soon as reasonably practical.
We had presented two reasonable opportunities, which each of these opportunities you have rejected on 28 September 2020. We believe these offers were acceptable and had incorporated your feedback and made each of the opportunities a viable option. On this basis, we will not be obliged to pay you the redundancy notice. We will however pay you the termination notice as per your contract of employment and any accrued entitlements up to and including 28 September 2020 ..."
[15] The email to Mr Lord also indicated that ASG would make an application to the Commission to vary his redundancy entitlements.
[16] There is no dispute that Mr Lord's former position was made redundant and that he is entitled to a redundancy payment by virtue of s.119, which is 7 weeks in his case. There is also no dispute that ASG made alternative employment offers to Mr Lord which he rejected. ASG does not claim any incapacity to pay.
[17] Accordingly, the issue to be determined is whether the 'other employment' offered to Mr Lord was 'acceptable' within the meaning of s.120(1)(b)(i). If I am satisfied that the employment offered to Mr Lord was acceptable, I will then proceed to consider whether to reduce the redundancy payment.
[18] Ms Bell's evidence dealt with her communications with Mr Lord in respect of the redeployment opportunities and the process and events leading to the redundancy.
[19] Ms Bell said that after meeting with Mr Lord on 22 September 2020 to discuss the initial offer of the position in Tomingley, ASG reviewed the position and made changes so that it became more acceptable in comparison to his previous role held at Moolarben. As a result, Mr Lord was offered the revised Tomingley position and another redeployment option, being the Dubbo position.
[20] ASG contends that the two positions offered to Mr Lord were acceptable alternative employment. Both positions involved the same or similar terms other than the location.
[21] ASG submits that information drawn from Google Map demonstrate that the distance between Mr Lord's home and the location of the Tomingley and Dubbo positions are approximately 163 kilometres and 113 kilometres respectively. This would result an additional 1 hour 23 minutes or 52 minutes travel time each way which, ASG submitted, is not unreasonable given the nature of ASG's business. In this regard, ASG notes that Mr Lord's employment contract provided that he may be required to trave to and from areas in which the Company operates and may be required to spend days away from his usual place of work. It is argued that Mr Lord's terms of employment contemplated a change of location due to the project nature of its business. This is consistent with the fact that Mr Lord was redeployed to a different client site in January 2018.
[22] As to Mr Lord's claim that the alternative employment offers would impact his lifestyle and social/community activities, ASG argues that no particulars of such impact were provided and in any event ASG had taken his concerns into account and altered the terms and condition in order to provide greater flexibility for him.
[23] ASG submits that it has obtained other acceptable employment for Mr Lord in satisfaction of s.120 of the Act and the redundancy entitlements should be reduced to nil.
[24] Mr Lord submits that the two alternative positions offered by ASG are not acceptable employment for the purposes of s.120(1)(b)(ii) of the Act because the location is unreasonably distant from his home.
[25] Mr Lord said that Moolarben is about 31 kilometres from his residence in Gulgong and the total time he used to commute for work was about one hour each day. The location of the Tomingley position and the Dubbo position is about 165 kilometres and 109 kilometres respectively from his residence. The distance is too far for him to commute safely on a daily basis before and after working a 10 hour shift. Working in either location would necessitate him residing in Dubbo for a minimum of four nights a week because of the potential fatigue and safety risks.
[26] In relation to the Tomingley position, Mr Lord claims that it would result in a loss of approximate of $30,000 in wages and allowances per annum due to decrease in hours of work.
[27] Mr Lord said that if he were to accept the alternative employment offered, he would suffer major undesirable changes to his lifestyle which would his social and community activities. In particular, he would be unable to perform his duties as Director of his local RSL Club in Gulgong.
[28] Mr Lord further submits that ASG can pay the full amount of redundancy pay to which he is entitled under s.119 of the Act and that the Commission must exercise any discretion having regard to all the relevant circumstances including the apparent purpose of the provisions and objects of the Act to achieve a fair and just outcome.
[29] It is well established that the question of whether the position offered was acceptable alternative employment must be determined objectively and that the mere rejection of the alternative employment does not make it objectively unacceptable.
[30] The Full Bench in Australian Chamber of Manufacturers v Derole Nominees Pty Ltd[1] (Derole Nominees) considered what constitutes 'acceptable alternative employment' and held:
"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 a like nature, the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others."[2]
[31] As put by Watson SDP in Feltex Australia Pty Ltd v Textile, Clothing and Footwear Union of Australia_[3]_:
"[89] I accept the proposition advanced by Feltex Australia that acceptable alternative employment is not necessarily identical employment and that the AIRC has previously found alternative employment to be acceptable notwithstanding inconvenience to employees and some detrimental alteration to the terms and conditions of employment."
[32] In a similar vein the Full Bench in Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd[4] found that the determination of whether alternative employment is acceptable will involve a consideration of 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.
[33] In Sodexo Australia Pty Ltd T/A Sodexo[5], Deputy President Sams considered various authorities in respect of the question of what constitutes 'other acceptable employment' and helpfully summarised the principles in the following terms:
"• the test of what constitutes 'acceptable employment' is an objective one. It does not mean it must be acceptable to the employee.
• There are a range of factors of varying weight, according to an employee's particular circumstances, which may be taken into account to assess the acceptability of alternative employment."[6]
[34] Having considered the evidence and submissions, I do not consider the Tomingley position to be acceptable alternative employment, because of the substantial loss of income and significant additional travel required.
[35] I accept Mr Lord's uncontested evidence that the position would result in a loss of some $30,000 in income.
[36] The distance to and from Mr Lord's home would involve an approximate 326 kilometre round trip daily. This would require him to drive nearly four hours each day as opposed to the one hour trip to and from Moolarben. The additional travel time in my view would have been excessive and not reasonable.
[37] On balance, I find that the Tomingley position is not an acceptable alternative position.
[38] I do consider that the Dubbo Position was an offer of acceptable alternative employment. There was no suggestion that this position involved any significant loss of salary and entitlements. With the exception of the location, it is the same or substantially similar in all other respects. Mr Lord did not take issue with any aspect of the Dubbo position other than the location.
[39] Whilst there was additional travel time involved, that being an additional 50 minutes each way, I do not consider it excessive taking into consideration of the nature of ASG's business and its rural location.
[40] The current matter involves a similar issue with respect to location to the matter of Spotless Services Australia Ltd[7], where Deputy President Sams found as follows:
"[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."
[41] Having considered all the relevant factors objectively, I am satisfied and find that ASG had obtained other acceptable employment for Mr Lord within the meaning of s.120(1)(b)(i).
[42] Given this finding, the final issue is whether there should be a reduction in the amount of the redundancy payment. As outlined earlier, this is a matter of discretion which is to be exercised having regard to all of the relevant circumstances of the particular matter.
[43] In this case, I consider there should be some reduction but not a reduction to zero as sought by ASG.
[44] Having come to the conclusion that ASG had obtained other acceptable employment for Mr Lord, I determine that it is appropriate in all the circumstances to reduce the amount of redundancy pay to an entitlement of five weeks' pay.
[45] An order giving effect to this decision will be issued accordingly.
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ASG Maintenance Pty Ltd
Robert Lord [2020] FWC 5894
(1990) 140 IR 128
(1988) 27 IR 226