Fair Work Act 2009

s.120 - Redundancy pay

Electricity Networks Corporation T/A Western Power

[1] This decision concerns an application by Electricity Networks Corporation T/A Western Power (Western Power or the Applicant) to reduce the amount of redundancy pay to which an employee, Mr Hasan Murad (the Respondent), is entitled under section 119 of the Fair Work Act 2009 (the Act).

[2] The parties were directed to provide submissions and witness statements regarding this matter. Both parties have provided detailed written submissions and in the case of Western Power a witness statement from Mr Zane Christmas (Mr Christmas), the Head of Network Maintenance Planning and Delivery at Western Power.

[3] The background to this application is that the Respondent had been employed as a Project Contracts Manager since August 2017. Prior to this he had been engaged as an independent contractor between 2007 and 2009, and again between 2012 and July 2017.

[4] The Respondent says that on around December 2017 Western Power commenced discussions with him in relation to a proposed restructure that would impact his area of work. He says he understood at this stage that this had the potential to make his position of Project Contracts Manager redundant.

[5] There was a hiatus in discussions about the restructure between January and May 2018.

[6] In late May 2018 Western Power announced to all staff that a new structure would be put in place.

[7] On 9 August 2018 the Respondent was advised orally and in writing that his position would likely become redundant. Mr Christmas says that during this discussion the Respondent was informed that a new role of Contract Delivery Manager would be created and that a skills matrix would be used to determine whether he or another employee who was also a contracts manager would be offered the new role. At this time the Respondent was provided with a proposed position description of the Contract Delivery Manager role and invited to provide feedback.

[8] Subsequently there were a series of interactions between the Respondent and Western Power about the proposed new role with the Respondent providing his feedback and concerns about this.

[9] On 15 August 2018 the Respondent wrote a letter to Ms Cho Anthony, an HR Business Partner within Western Power, detailing his complaints, concerns and objections to the proposed Contract Delivery Manager role. These included amongst other things his view that the title of the new role implied a downgrade in rank and seniority, that the additional requirement to perform superintendent duties in addition to an area manager's duties was in his view impossible, the this change involved some risk of personal liability and consequential litigation and created some conflicts of interest. He viewed the new role as significantly different from his current role.

[10] Around 24 August 2018 Mr Christmas met with the Respondent and told him that Western Power wanted to offer him the Contract Delivery Manager role. The Respondent in response indicated he would prefer to be made redundant.

[11] Consistent with this on 28 August 2018 the Respondent wrote to Mr Christmas advising that in his opinion his current role no longer existed therefore he believed his employment had been terminated and he was entitled to be paid redundancy pay pursuant to section 119 of the Act.

[12] Two days later on 30 August 2018 Mr Christmas wrote to the Respondent and advised him that as a consequence of structural changes within the business his current role of Project Contracts Manager would no longer be required after 5 October 2018. Mr Christmas referred to obligations contained within the Western Power and Australian Services Union Enterprise Agreement 2017 [AE426510] (the Agreement) and discussions that had been held with the Respondent and confirmed that they were offering him,

"...employment in the alternative role of Contract Delivery Manager with a career level of F2. Your remuneration will remain at $212,000 per annum and your EA equivalent pay point will be 9.1P. The position description is attached for your information."

[13] The letter went on to say that the role would commence on 8 October 2018 and all other terms and conditions of his employment would remain unchanged and will continue in accordance with his contract of employment.

[14] The letter went on to advise that if the Respondent did not accept this offer of employment or other identified suitable alternative positions his employment would be terminated with effect from 5 October 2018 and if this occurs he may not be entitled to receive a redundancy payment.

[15] The letter went on to say that in line with the Respondent's feedback Western Power was prepared to provide a variation of the offered position "...without the superintendent oversight component,...".

[16] In response on 3 September 2018 the Respondent wrote to Mr Christmas and advised that his position remained unchanged and that offer of the alternative role of Contract Delivery Manager was not acceptable to him.

[17] The parties have provided the Commission with a copy of the respective position descriptions for the Project Contracts Manager role which was redundant and the alternative role of Contract Delivery Manager.

[18] I generally agree with the submission of Western Power that a comparison of the two position descriptions demonstrates that,

• the remuneration and compensation was the same for both roles,

• both roles are full-time,

• the respective Position Purposes whilst not identical are very similar,

• the respective Impacts are the same,

• the respective Key Challenges are largely the same,

• the respective Key Accountabilities are the same,

• both roles have the same hours of work, both roles are based in the same Head Office,

• there is no loss of fringe benefits, no change in job security and the Respondent's accrued entitlements would carry over with no break in continuity of service.

[19] I am also satisfied that the Respondent had the skills and experience to perform the alternative role

[20] Sections 119 and 120 of the Act are relevant for the purposes of this decision and are set out below.

(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."

Section 120 of the Act and the Agreement

[21] Both parties provided submissions on a decision of a Full Bench of the Commission, Maritime Union of Australia v FBIS International Protective Services (Australia) Pty Ltd[1] (FBIS Decision), and its application to the situation here.

[22] Western Power submits that the Agreement includes a redevelopment, retraining and redundancy clause which is in different terms to the redundancy provisions of the National Employment Standards (NES).

[23] Relevantly Western Power points to the provision of the Agreement at clause 23(b)(ii) which reads as follows,

"If an employee's role becomes redundant and there is no alternative role under the provisions of the Retraining and Redevelopment for the employee in Western Power, the employee will be entitled to the redundancy payment contained in this clause..."

[24] Western Power says that its position is that there was an alternative role under the provisions of the Retraining and Redevelopment for the Respondent, which he refused to take up, and consequently he has no entitlement to a redundancy payment under clause 23 of the Agreement.

[25] Western Power submit that the Full Bench in the FBIS Decision provides that an employee's entitlements under the NES and under the terms of an agreement operate in parallel and because of this Western Power was required to make this application under section 120 of the Act to vary the redundancy pay entitlement the Respondent would still have under section 119 of the Act, notwithstanding in Western Power's view he has no entitlement under the clause of the Agreement.

[26] Whilst I agree with the Applicant's understanding of the principle established by the FBIS Decision the Commission's role in dealing with this application is not to rule on whether Western Power's position about the Respondent's entitlement, or lack of it, under the Agreement is correct but rather to simply determine the application Western Power has made under section 119 of the Act.

Did Western Power obtain other employment for the employee?

[27] In this case I do find that Western Power had obtained other employment for the Respondent, that employment being the newly established position of Contract Delivery Manager.

[28] Considering the facts and the finding above the issue next to be determined by the Commission is whether the alternative position of Contract Delivery Manager was "other acceptable employment". Only if it was other acceptable employment must the Commission then consider whether to exercise its discretion to reduce the amount of redundancy pay payable and if so by what amount.

[29] As noted by the Full Bench in Australian Chamber of Manufacturers v Derole Nominees Pty Ltd[2] at 124:

"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 provisions 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 elections 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."

[30] As was explained by Watson SDP in Feltex Australia Pty Ltd v Textile, Clothing and Footwear Union of Australia[3] at [89]:

"...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."

[31] In Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd[4] a Full Bench of the Commission 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.

[32] In National Union of Workers v Linfox Australia Pty Ltd[5] Watson VP considered the following criteria to be relevant when determining whether alternative employment is acceptable:

(a) the employee's skills, experience and physical capacity;

(b) the rates of pay, hours of work, duties and conditions of employment associated with the proposed job;

(c) whether or not continuity of employment is provided to the employee;

(d) the extent of any additional travel distances from home to the new place of work and whether the employee has to substantially alter their method of travelling to and from work in order to attend to duty; and

[33] In my view the term "acceptable alternative employment" considered in this case law should be taken to have the same meaning as the term "other acceptable employment" which is used in section 120 of the Act and hence the case law is directly applicable in this matter.

[34] In my view it is quite clear on the facts that whilst the redundant role and the newly created role were not identical there were very many similarities when one considers the responsibilities, the duties and the working environment. Separately the employment entitlements were in fact the same and there would be no disadvantage in terms of employment entitlements to the Respondent if he had accepted the new role. There is also no doubt the Respondent had the skills and experience to undertake the new role.

[35] Whilst the Respondent was entitled to have concerns about the new role and was entitled to exercise his personal preference not to take up the new role that is not determinative of the question as to whether the new role was, objectively, acceptable alternative employment.

[36] It is my decision that the role of Contract Delivery Manager was other acceptable employment which had been obtained for the Respondent by Western Power.

[37] Consequently I will now exercise my discretion to determine that the amount of redundancy pay to which the Respondent is entitled to be paid because of section 119 of the Act is reduced to nil.

[38] An order [PR703635] to that effect will be issued in conjunction with this decision.

[1] [2014] FWCFB 6737.

[2] [1990] AIRC 980; (1990) 140 IR 123.

[5] [2008] AIRC 647.

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