s 120 - Redundancy pay

Fox & Gordon Pty Ltd Trading AS Montessori Early Years Learning and Care Centre

Variation of redundancy pay - whether other acceptable employment offered - alternate role did not constitute other acceptable employment - loss of job security and other associated benefits of permanent full-time employment more significant - casual role offered not acceptable other employment -acceptable other employment not obtained - Applicant not found to be unable to pay redundancy entitlement - application dismissed.

• [1] Fox & Gordon Pty Ltd Trading As Montessori Early Years Learning and Care Centre has applied under s 120 of the Fair Work Act 2009 (Cth) to vary its obligation to pay redundancy pay under s 119 of the Act. The application is in relation to a former employee, Mr Jonathan Vermeulen. Montessori EYLCC seeks to reduce Mr Vermeulen's entitlement to redundancy pay from six weeks to nil on the basis it obtained other acceptable employment for Mr Vermeulen. In the alternative, Montessori EYLCC says it cannot pay Mr Vermeulen's redundancy. Mr Vermeulen objects to both grounds.

• [2] After filing their material, the parties sought for the matter to be determined on the papers. I am satisfied it is appropriate to do so.

• [3] Having considered the evidence and materials in this matter, I find that the other employment that Montessori EYLCC offered Mr Vermeulen was not acceptable employment for the purpose of s 120(1)(b)(i). I am also not satisfied that Montessori EYLCC cannot pay Mr Vermeulen's redundancy.

• [5] The following facts are not contested between the parties.

• [6] Mr Vermeulen commenced his employment with Montessori EYLCC on or around Monday 11 July 2022 as a full-time carpenter. Mr Vermeulen had initially responded to an advertisement for a carpenter to work for Perth Building Projects Pty Ltd. Mr Gerard Gordon is the director of Perth Building Projects and is the husband of Ms Jennifer Gordon, who is the director of Montessori EYLCC. Mr Gordon explained to Mr Vermeulen that the role involved renovating the Montessori EYLCC centre in Lake Coogee.

• [7] Mr Vermeulen worked on the Lake Coogee renovations up until March 2024. After this, Mr Vermeulen worked on other projects under the direction of Perth Building Projects but remained an employee of Montessori EYLCC.

• [8] On Monday 31 March 2025, Montessori EYLCC sent the following email to Mr Vermeulen:

We (Fox & Gordon Pty Ltd) are writing to formally advise you of your intention to offer you redeployment to Perth Building Projects Pty Ltd. under the direction of Gerard Gordon. This information is being sent via email given the limited direct contact the Director/Employer of Fox & Gordon Pty Ltd. has had with you.

As you are award, in September 2024, you expressed your intention to leave the company to pursue alternative employment within the police sector, though no specific end date has been provided at this stage. In good faith we have continued your employment, despite notice having been provided, which could have been accepted with two weeks notice.

Given the company's current financial position, we are struggling to sustain your employment under Fox & Gordon as a Supervisor Carpenter & not working within our childcare centres, which would have a direct operational benefit. Additionally, since you have not been actively working for Fox & Gordon Pty Ltd for some time & have instead been fulfilling duties for Perth Building Projects, which you have accepted, there are no ongoing roles available within Fox & Gordon Pty Ltd. that we can offer you.

However, we value your contributions and would like to provide you with the opportunity to continue working with our associated entity in a similar capacity. We are offering you a deployment to Perth Building Projects Pty Ltd, where you would be continuing to work under the direction of Gerard Gordon. This position would be on a casual basis, with your current hourly rate remaining unchanged, which well exceeds the current award pay rate under the Building & Construction Award.

We appreciated your contributions and want to ensure you have clarity regarding your employment options. If you have any suggestions or reasons as to why the above should not take place, we would appreciate receiving them via return email.

• [9] On Tuesday 1 April 2025, Mr Vermeulen wrote back to say he did not wish to accept the redeployment offer. Mr Vermeulen was then invited to a meeting with Ms Gordon to discuss the matter. Mr Vermeulen indicated that he would prefer for any further communication to proceed over email.

• [10] On Wednesday 2 April 2025, Montessori EYLCC sent the following letter to Mr Vermeulen:

Following the formal invitation to attend a meeting (which was scheduled to occur at 1.00pm, Wednesday 2nd April 2025) which you declined, your rejection of deployment to Perth Building Projects Pty Ltd, and failure to provide any suitable suggestions or alternative solutions, we wish to advise that you will not be offered ongoing employment with Fox & Gordon Pty Ltd T/As Montessori Early Years Learning and Care Centre. This is due to your position no longer being required by Fox & Gordon Pty Ltd T/As Montessori Early Years Learning and Care Centre, due to changes in the operational requirements of the company. Additionally, the company has found that we are no longer able to financially sustain your position & the associated wages. AS a result, we are providing you with two weeks' notice in accordance with your employment contract.

The following entitlements will be paid to you on the 1st May 2025:

• - Any amounts owing for the time worked but not yet paid; and
• - Unused annual leave entitlements that have been accrued

Given your refusal of redeployment to Perth Building Projects Pty Ltd, following the delivery of this Termination of Employment Letter Fox & Gordon Pty Ltd T/As Montessori Early Years Learning and Care Centre will be submitted an F45A application form to Fair Work with regards to any redundancy payments.

Please ensure that all uniform shifts, company property & the remote for the electronic gate (for the Gibbs Road property) are returned on your final day of employment.

• [11] Mr Vermeulen's last day of employment was Wednesday16 April 2025.

• [12] Section 119 of the Act provides for the following redundancy pay entitlements:

(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

(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

• [13] 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, the FWC may determine that the amount of redundancy pay is reduced to a specific 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.

• [14] It is well established that in applications such as these, the onus lies on the applicant employer seeking the exemption from redundancy payment obligations.

• [15] In relation to s 120(1)(b)(i) of the Act, the Full Bench in Australian Commercial Catering Pty Ltd Powell and Togia; Powell v Australian Commercial Catering Pty Ltd[1] set out that the test in relation to s 120(1)(b)(i) of the Act is an objective one and is not determined by reference to whether the employment is subjectively acceptable to the employee.[2] Further, that once the preconditions in s 120(1) are satisfied, the determination of whether to reduce an employee's entitlement to redundancy pay requires the exercise of a broad discretionary power.[3]

• [16] In FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia,[4] a Full Court of the Federal Court found that an employer 'obtains' other acceptable employment when it acquires or gets the employment by its conscious, intended acts.

• [17] In Spotless Services Australia Limited,[5] Deputy President Sams helpfully summarised authorities on what 'other acceptable employment' means and relevantly stated:

[65] The above decisions have some common features, including:

• The test of what constitutes 'acceptable employment' is an objective one. It does not mean it must be acceptable to the employee.

• 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.'

• The acceptance of alternative employment by one or more persons in a group of redundant employees, does not necessarily make the alternative employment 'acceptable' for all of them. Each employee's individual circumstances must be taken into account.

• 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.

• [18] Montessori EYLCC filed material detailing matters such as alleged issues with Mr Vermeulen's performance and the stress that this process has had on Ms Gordon. I note that these matters are not relevant to the considerations under s 120 of the Act.

• [19] Montessori EYLCC confusingly also seemed to make the written submission that Mr Vermeulen was not made redundant, stating that:

In all communications between Fox and Gordon Pty Ltd personnel and Mr. Vermeulen, there was no mention of redundancy or any redundancy payment. The company strongly denies that the term redundancy was ever used in discussions with Mr. Vermeulen. It appears that he may have interpreted the information provided to him in a way that led to the assumption he is entitled to a redundancy payment.[6]

• [20] Montessori EYLCC also appeared to make the submission that Mr Vermeulen had resigned his employment in September 2024 and March 2025 when he informed them of his application to join the WA Police.

• [21] Putting to one side the question why Montessori EYLCC have made this application if they believe that Mr Vermeulen was not made redundant or that Mr Vermeulen resigned his employment, based on the materials before me - particularly the termination letter by Montessori EYLCC - I am satisfied that Mr Vermeulen was made redundant and was entitled to be paid 6 weeks redundancy pay in accordance with s 119 of the Act.

4.1 Did Montessori EYLCC obtain other acceptable employment for Mr Vermeulen?

• [22] In this matter, it is not contested - and I am satisfied - that Montessori EYLCC obtained the casual carpenter position with Perth Building Projects. The question is whether the new role was acceptable employment.

• [23] Montessori EYLCC submits that the position and pay rate would have remained the same, but as a casual employee instead of full-time. Montessori EYLCC also submits that as Mr Vermeulen was in the process of sourcing other employment with the WA Police, this would have provided him with the flexibility to attend any new employment obligations.

• [24] I appreciate that Montessori EYLCC seems to have approached the situation by offering a role that it thought would fit with Mr Vermeulen's future circumstances given he was in the process of joining the WA Police. However, the test requires consideration of the relevant employee's role prior to the redundancy, not a future set of circumstances.

• [25] Mr Vermeulen submits that the casual role was not acceptable employment as he would not have the benefit of job security, hours of work, continuity of service, fringe benefits, or leave entitlements.

• [26] I agree with Mr Vermeulen. His prior role was on a full-time basis, a benefit that he had enjoyed for three years. I note Mr Gordon's evidence that for Perth Building Projects 'jobs are not guaranteed' and that much of Perth Building Projects' work is carried out by sub-contractors. Going from guaranteed full-time work to a casual contract with no contractual guarantee of work is a significant factor.

• [27] In this case, though the similar pay rate and duties are a factor in favour of a finding that the casual role offered was acceptable other employment, I find the loss of job security and other associated benefits of permanent full-time employment is more significant. I do not find that the casual role offered was acceptable other employment.

4.2 Am I satisfied that Montessori EYLCC cannot pay the redundancy amount?

• [28] The short answer to this question is 'no'.

• [29] In support of its position, Montessori EYLCC filed the following material:

• (a) A letter from Munro's Accountants and Business Advisors that states they are the accountants for Montessori EYLCC and that from their perspective, 'given the current cash flow and outstanding liabilities position of the company, it was necessary that the employee Jonathon Vermeulen no longer be a part of the company's payroll, as it is no longer viable to have him included'.[7] This is an extremely brief letter with no detail or supporting documentation regarding Montessori EYLCC's cash flow and outstanding liabilities.

(b) A statement from Paula Rogers, who works in the Montessori EYLC accounts department. Ms Rogers' evidence is that the decision to end Mr Vermeulen's employment due to serious and ongoing cash flow difficulties that were significantly affecting the business' sustainability. No further detail regarding these cash flow difficulties is provided.

• [30] Montessori also filed the following documents, but with no explanation as to why they were significant or how I should consider them:[8]

(a) A loan account statement from National Australia Bank showing transactions from 30 April 2025 to 1 May 2025.

(b) A statement overview from Prospa for the period Tuesday 1 April 2025 to Wednesday 30 April 2025.

(c) A remuneration report that shows that Mr Vermeulen received the highest hourly rate out of Montessori EYLCC's employees.

• [31] The most compelling evidence came from Montessori EYLCC's written submissions, which were signed off by Ms Gordon. As Montessori EYLCC is an unrepresented party, I also regard the submissions as Ms Gordon's evidence.

• [32] The first submission signed by Ms Gordon provides that Montessori EYLCC could not financially sustain Mr Vermeulen's wages and associated costs. Further, that as Montessori EYLCC was facing financial hardship, it had been invoicing Perth Building Projects for Mr Vermeulen's hours from August 2024 until the end of his employment.[9]

• [33] The second submission signed by Ms Gordon provides that enrolments at the business are limited and the prolonged duration of renovation works has exacerbated the situation. Further, that Montessori EYLCC is facing substantial financial obligations, including the debts to the ATO and money owed to suppliers. In support of this, Montessori EYLCC did provide a screenshot of the Fox and Gordon Pty Ltd Australian Taxation Office Homepage that shows the amount that Montessori EYLCC owes to the ATO and an Aged Payables Summary as at Wednesday 14 May 2025. It is not necessary for me to detail the amounts in those documents.

• [34] Ms Gordon also cites in general terms that the company is required to meet ongoing increases to staff wages as well as other operational expenses.

• [35] I accept that Montessori EYLCC has outstanding loans and debts. I also accept that Montessori EYLCC has other fixed costs such as staffing, utilities and maintenance. However, I do not have the context of these financial pressures. Montessori EYLCC described in general terms the issue with enrolments, but did not provide any details regarding its revenue or assets. Without this information, I cannot properly assess or find that Montessori EYLCC cannot pay Mr Vermeulen's redundancy entitlement.

• [36] On the material before me, I do not find that Montessori EYLCC obtained acceptable other employment for Mr Vermeulen, nor do I find that Montessori EYLCC cannot pay Mr Vermeulen's redundancy entitlement. Montessori EYLCC's application is accordingly dismissed.

[1] [2016] FWCFB 5467.

[4] [2015] FCAFC 90.

[5] [2016] FWC 4505.

[6] Fox and Gordon Pty Ltd, 'Final Response Submission', Submission in Application by Fox and Gordon Pty Ltd T/A Montessori Early Years Learning and Care Centre, C2025/2511, 15 May 2025, [14].

[7] Letter from Michael Beer, Munro's Accountants and Business Advisors, 23 April 2025.

[8] I have tried to refer to the details in this document in general terms to preserve Montessori's EYLCC privacy.

[9] Jonathan Vermeulen, 'Written Submissions - Termination and Redeployment of Mr Jonathan Vermeulen', Submission in Application by Fox and Gordon Pty Ltd T/A Montessori Early Years Learning and Care Centre, C2025/2511, 30 April 2025.

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