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

Australian Footwear Pty Ltd T/A Munro Footwear Group

Application for variation of redundancy pay - satisfied the applicant obtained other acceptable employment for the employee and reduction appropriate - application granted.

• [1] Australian Footwear Pty Ltd trading as Munro Footwear Group (Munro) has applied for an order under s.120 of the Fair Work Act 2009 (the Act) to reduce the redundancy entitlement of Ms Raelene Risby. The application is made on the basis that Munro has obtained other acceptable employment for Ms Risby.

• [2] Having worked at Munro for 29 years and 6 months, Ms Risby would otherwise be entitled to 12 weeks redundancy pay, which equates to $15,791.07. Munro has applied to reduce this amount to $2,957.09. Ms Risby does not oppose this.

• [3] Section 119 of the Act provides the statutory right to redundancy pay in amounts calculated based on an employee's continuous service with the employer.

• [4] Section 120 of the Act provides as follows:

(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."

• [5] Ms Risby was until recently employed in the full-time role of Cluster Manager, serving as Store Manager of Williams Coff Plaza with additional oversight of three other stores:

1. Williams Ballina;
2. Williams Tweed City; and
3. Williams Grafton.

• [6] Munro has undertaken a retail restructure. It undertook consultation with Ms Risby and offered her ongoing full-time employment as Dual Store Manager, a role requiring her to manage both the Williams and Mathers stores at Coff Plaza. Munro asserts that Ms Risby verbally accepted the offer of this role on 16 May 2025 and formally accepted it on 22 May 2025. Munro explains that the rationale behind its application to have the redundancy amount reduced to $2,957.09, is that this amount is the difference between Ms Risby's former annual salary as a Cluster Manager and the annual salary payable to a Dual Store Manager.

• [7] In applications such as these, the onus lies on the employer company seeking the exemption from redundancy payment obligations and the discretion exists for the Commission to make an order to reduce or remove an employee's statutory entitlement to redundancy pay.

• [8] The Full Bench of the Commission in Australian Commercial Catering Pty Ltd v Powell and Togia; Powell v Australian Commercial Catering Pty Ltd[1] outlines the approach that I intend to follow in considering Munro's application to reduce Ms Risby's redundancy pay:

"[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.

[36] As was pointed out in the Full Court decision, "The origin of s 120 lies in the decision of the Full Bench of the Conciliation and Arbitration Commission in Termination, Change and Redundancy Case [1984] CthArbRp 284; (1984) 8 IR 34 to introduce an entitlement to severance pay for all employees under federal awards whose employment had been terminated because of redundancy".[2] Cases decided in relation to award provisions established pursuant to those test case provisions are therefore relevant in the consideration of s.120.

[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.[3] The determination of whether alternative employment is acceptable requires an assessment and value judgment on the part of the decision-maker.[4] The employer "obtains" other acceptable employment when it acquires or gets the employment by its conscious, intended acts.[5]

[38] Once it is concluded that the preconditions in s.120(1) are satisfied so that s.120 is applicable, it will be necessary for the Commission to determine under s.120(2) whether the employee's entitlement to redundancy pay under s.119 should be reduced and, if so, by how much. This requires the exercise of a broad discretionary power.[6] Any determination by the Commission for a reduced amount of redundancy pay then becomes the employee's entitlement under s.119: s.120(3)."

• [9] There is no dispute that Ms Risby's position as a Cluster Manager is redundant and that she would, therefore, ordinarily be entitled to redundancy pay pursuant to s.119(1) of the Act.

• [10] As to whether Munro has obtained other acceptable employment for Ms Risby (s.120(1)(b)(i) of the Act), I am satisfied Munro acquired or "got" the employment for Ms Risby within its own organisation. Munro identified that it had an ongoing full-time Dual Store Manager position available and offered it to Ms Risby when consulting with her in relation to the restructure. I must also be satisfied the full-time Dual Store Manager position constitutes "other acceptable employment". Whether alternative employment is "acceptable", is to be determined objectively. In Clothing & Allied Trades Union of Australia v Hot Tuna Pty Ltd,[7] the Full Bench of the Australian Conciliation and Arbitration Commission stated:

"...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."[8]

• [11] Having regard to the information I received from Munro in the Form F45- Application to vary redundancy pay (Form F45A), I consider Ms Risby's new employment with Munro is objectively acceptable in the sense required by s.120(1)(b)(i) of the Act having regard to the following factors. Ms Risby remains employed on a full-time basis. While Ms Risby was previously charged with oversight of four stores and now only has two within her remit, the previous four stores were in Coffs Harbour, Ballina, Tweed Heads and Grafton, whereas both of her stores are now within the same location in Coffs Harbour. I also note that there will have been no break in Ms Risby's continuous service, meaning that both her 29.5 years of service and her various accrued entitlements to leave will have been maintained. Further, I note that while the gross reduction in Ms Risby's weekly salary equates to $56.87, Munro would effectively maintain Ms Risby's previous salary for a further year if it was to pay her the gross sum of $2,957.09.

• [12] Having concluded that the preconditions in s.120(1) are satisfied and that s.120 is therefore applicable, I am also satisfied that this is an appropriate case for the exercise of the Commission's broad discretionary power under s.120(2) to thereby reduce Ms Risby's entitlement to redundancy pay in the manner sought. In particular, I am persuaded that Ms Risby wants to continue in the employment of Munro, albeit in a different role. This and the continuity of both her substantial service and her leave entitlements are significant factors. Secondly, effectively maintaining Ms Risby's previous salary for a further 12 months compares favourably to the entitlement that would have applied had Ms Risby been covered by the General Retail Industry Award 2020 (i.e. she could have been transferred to lower paid duties on 5 weeks' notice in a redundancy situation, or received a payment for the difference between the two roles in lieu, to a maximum of 5 weeks).[9] Thirdly, I note that when responding to the invitation to review the Form F45A and the application more generally, Ms Risby advised:

1. She believes that the application made by Munro to reduce the redundancy pay to $2,957.09 is fair and warranted;

1. She has reviewed the details in the Form F45A and considers them accurate; and

1. She has no other issues she wishes to be considered.

• [13] Relatedly, I am satisfied there are no significant countervailing considerations weighing against the exercise of my discretion.

• [14] I am satisfied that Munro has obtained other acceptable employment for Ms Risby and that in all the circumstances it is appropriate to reduce her s.119 entitlement to redundancy pay to $2,957.09. An order[10] will be issued separately reflecting this decision.

[1] [2016] FWCFB 5467.

[2] [2015] FCAFC 189 at [12].

[3] Clothing & Allied Trades Union of Australia v Hot Tuna Pty Ltd (1988) 27 IR 226; Clothing Trades Award 1982(1) [1990] AIRC 980; (1990) 140 IR 123.

[4] [2015] FCAFC 189 at [45].

[5] FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia [2015] FCAFC 90 at [20].

[6] Ibid at [21]; [2015] FCAFC 189 at [42], [60].

[7] (1988) 27 IR 226.

[9] General Retail Industry Award 2020 (MA000004) at clause 38.1.

[10] PR788926.

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