Fair Work Act 2009

s.120 - Redundancy pay

Epichealth Pty Ltd Trading AS Epichealth Medical Clinic - Langwarrin

Variation of redundancy pay - Application to vary redundancy pay to nil - Application dismissed.

• [1] Epichealth Pty Ltd T/A Epichealth Medical Clinic - Langwarrin (Epichealth) has filed an application pursuant to s.120 of the Fair Work Act 2009 (the Act) seeking to vary the redundancy pay of Ms Vanessa Mete. Ms Mete objects to the application.

• [2] The matter was listed for a Case Management Conference. I subsequently issued Directions to the parties. The parties filed material in compliance with the Directions. The matter progressed to a Determinative Conference. Ms Mete and Ms Peggy Leung, Director of Epichealth, gave evidence.

• [3] In its Form F45A - Application to vary redundancy pay (Form F45A), Epichealth sought to vary Ms Mete's redundancy pay to nil on the basis that it had obtained other acceptable employment for Ms Mete. For the reasons outlined below, I am not satisfied that Epichealth has obtained other acceptable employment for Ms Mete and therefore decline to vary her redundancy pay.

• [4] Epichealth sold its medical centre, at which Ms Mete was employed as Practice Nurse, to a new owner.

• [5] Epichealth contends that it obtained other 'acceptable' employment for Ms Mete within the meaning of s.120 of the Act. Epichealth says that 'as part of the sale, Medusa Health Care Pty Ltd (Medusa) will continue to employ the staff for the same role at the same location.'[1]

• [6] Epichealth issued a notice of termination to Ms Mete on 15 April 2025 advising that her employment would cease on 28 April 2025. However, due to a delay, the sale of the business did not go through until 30 May 2025. Ms Mete did not receive any communication regarding a change to her termination date and continued to attend work at Epichealth Medical Clinic - Langwarrin until the sale of the business was complete.

• [7] On 5 June 2025, Ms Mete was paid out her annual leave and her accrued long service leave (LSL) was transferred to Medusa as part of the agreement for the sale of the business. However, Ms Mete says she was originally advised that her LSL would not be transferred to Medusa, and that she only found out this entitlement would transfer over after her employment with Epichealth ended on 30 June 2025.

• [8] Ms Mete submissions outline the following reasons for objecting to the application to reduce her redundancy entitlement:

• The new role at Medusa is less secure as it is subject to a 6-month probationary period and provides for only one weeks' notice of termination; and

• Her existing entitlements did not transfer across to the Medusa, and as such, her personal leave, community service leave, parental leave and long service leave entitlements have been negatively impacted; and

• Her annual leave was paid out, which impacts her ability to take paid leave and have a rest/ break.

• [9] Section 120 of the Act outlines as follows:

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.

• [10] 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

• [11] 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 can exercise its discretion. Section 120(2) of the Act 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 (s.120(3)).

• [12] Epichealth is not seeking to reduce the payment of redundancy pay to the affected employees because it cannot pay the amount owed. The principal questions for consideration in this matter are whether Epichealth 'obtained' employment for Ms Mete with Medusa and whether this employment can be considered 'other acceptable employment'. If so, then I must decide whether to exercise my discretion to reduce the amount of Ms Mete's redundancy pay.

Does Ms Mete have an entitlement to redundancy pay?

• [13] There is no dispute that Ms Mete has an entitlement to be paid 6 weeks of redundancy pursuant to s.119 of the Act.

• [14] The Full Bench of the Commission in Australian Commercial Catering Pty Ltd v Powell and Togia; Powell v Australian Commercial Catering Pty Ltd[2] outlines the approach to be considered in s.120 applications:

"[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 34to introduce an entitlement to severance pay for all employees under federal awards whose employment had been terminated because of redundancy". Cases decided in relation to award provisions established pursuant to those test case provisions are therefore relevant in the consideration of s.120. 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.

[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. Any determination by the Commission for a reduced amount of redundancy pay then becomes the employee's entitlement under s.119: s.120(3)."

• Acceptable employment is not identical employment, as no two jobs could be exactly the same.
• An employee must meaningfully cooperate with the employer in exploring or considering options for alternative positions.
• An employee's prima facie entitlement to redundancy pay may be at risk if the employee refuses a role or position, which is found to be objectively 'acceptable.'

Has Epichealth 'obtained' other acceptable employment for Ms Mete?

• [15] Epichealth says it obtained other acceptable employment for Ms Mete with Medusa. At the Determinative Conference, it was Ms Leung's evidence that during the process for the sale of the business, Epichealth recommended to Medusa that they employ all the employees currently working at the Langwarrin clinic. Ms Leung said that it was not a contractual term of the sale of the business that Epichealth's employees would be employed by Medusa. It was Ms Leung's evidence that although she made the recommendation to Medusa, it was ultimately up to Medusa as to whether they would employ Ms Mete. Ms Leung said that she did not have any discussions with Ms Mete about the role, or what was being offered at Medusa, including whether the role was considered acceptable employment.

• [16] Ms Mete says that she did not have any conversations or receive any documentation from Epichealth about a position with Medusa, or about what terms and conditions would apply if Ms Mete was to be employed by Medusa. Ms Leung confirmed that she did not have any conversations with Ms Mete and said that updates to employees about the sale of the business were provided by the practice manager at the clinic. Ms Mete disagrees and says that no updates were provided at all. Ms Mete said that the lack of communication and information was very stressful and that it was concerning to not be told what was happening or to know whether she would have a job to go to.

• [17] Ms Leung says she facilitated a visit by Medusa to the Langwarrin clinic to allow them to see the clinic and meet the employees, and that she provided payroll information to Medusa regarding Ms Mete. However, this appears to be the extent of Epichealth's involvement with Ms Mete and Medusa. Ms Leung said that she was not involved in any discussions about Ms Mete's employment at Medusa. She said she was not involved in any discussions about Medusa's employment contracts, although she did receive a copy of the contract.

• [18] I cannot be satisfied that Epichealth 'obtained' or acquired other acceptable employment for Ms Mete. Epichealth did nothing more than recommend Ms Mete to Medusa and facilitate an introduction at the preliminary stage of the business sale process. It is evident that Epichealth then adopted a 'hands-off' approach. This is demonstrated by the fact it never met with Ms Mete to discuss with her the possibility of a role with Medusa, what pay and conditions would apply to her employment, and whether it was acceptable employment. I consider that this falls short of having 'obtained' Ms Mete a position at Medusa.

• [19] Having found that Epichealth did not obtain Ms Mete's employment with Medusa, it is not necessary to determine the issue of whether this employment was 'other acceptable employment'. Having found that I am not satisfied that Epichealth has 'obtained' other acceptable employment for Ms Mete, I cannot proceed to vary the redundancy pay. I therefore determine to dismiss Epichealth's application under s.120 of the Act. An Order[3] to this effect will be issued with this Decision.

[2] [2016] FWCFB 5467.

[3] PR790184.

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