Fair Work Act 2009

s.120 - Redundancy pay

[1] Get Started Pty Ltd (Get Started) has made an application pursuant to s.120(2) of the Fair Work Act 2009 (Act) to have the Commission reduce to nil the redundancy entitlement of Mr Matthew Lee, a former employee of the company whose employment ended for reason of redundancy.

[2] Mr Lee was employed as a web developer in the company's Sydney office from 23 March 2016 until 2 March 2018. At the time of his redundancy, he had just less than two years' continuous service with the company. The National Employment Standards (NES) in the Act prescribe minimum entitlements for employees in respect of redundancy pay. Section 119(2) provides that an employee who at the time of redundancy has a period of continuous service with the employer of at least one year but less than two years is entitled to receive four weeks' redundancy pay.

[3] The company sought to reduce Mr Lee's redundancy entitlement from four weeks' pay to nil, on the basis that it had obtained other acceptable employment for him, namely a similar role at Levo Group Pty Ltd (Levo).

[4] The matter was listed before me for a telephone mention on Tuesday, 10 April 2018. Having heard from the parties, I issued directions that they file outlines of submission and any witness statements or other documents they sought to rely on. A telephone hearing was conducted on 31 May 2018.

[5] Section 120 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 Act.

[6] 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 may exercise its discretion. Section 120(2) then 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 (see s.120(3)).

[7] The principal questions for consideration in the present matter are whether Get Started 'obtained' employment for Mr Lee at Levo and whether this employment was 'other acceptable employment'. If so, I must decide whether to exercise my discretion to reduce the amount of Mr Lee's redundancy pay.

[8] Towards the end of 2017, Get Started was experiencing a reduction in business. On 18 December 2017, Mr Adam Griffith, the company's managing director, spoke with Mr Craig Roberts, a director of Levo, concerning the excess capacity of Get Started's development team. Levo, like Get Started, is a digital agency specialising in niche content management systems, namely 'Episerver' and 'Kentico'. Mr Griffith told Mr Roberts that Get Started's development team would be able to undertake any overflow work with which Levo might need assistance.

[9] The downturn in work persisted into the New Year. On 15 February 2018, Mr Griffith met with Mr Lee and told him that his employment would cease for reason of redundancy. The agreed termination date was 2 March 2018. Mr Griffith told Mr Lee that he would be provided with the statutory redundancy entitlement, commensurate with his length of service. The following day, the company's CEO sent a message to Mr Lee confirming the redundancy arrangements.

[10] Then on 19 February 2018, Mr Roberts sent an email to Mr Griffith, in which he referred to their pre-Christmas discussions and inquired whether he could 'borrow' a developer to assist Levo during a busy period. Mr Griffith called Mr Roberts and told him about Mr Lee's redundancy, and recommended him for any full-time position that Levo might have available. He also recommended Mr Lee for the short-term work referred to in Mr Roberts' email. After their telephone conversation, Mr Griffith sent Mr Roberts a message containing a link to Mr Lee's LinkedIn profile, and confirming that his employment with Get Started would end on 2 March 2018.

[11] On 20 February, Mr Griffith told Mr Lee that Levo was interested in talking with him about employment with the company. Mr Lee was interviewed by Levo on 21 February 2018. On 23 February 2018, Mr Lee accepted an offer of full-time ongoing employment with Levo.

[12] On 6 March 2018, in the course of confirming Mr Lee's statutory redundancy entitlement on the Fair Work Ombudsman's website, Mr Griffith became aware of the possibility of an employer making an application under s.120 of the Act to reduce redundancy pay, where it has obtained other acceptable employment for an employee. On the same day, the company filed the present application.

[13] The company contends that it put Mr Lee forward for a full-time position with Levo, with a strong recommendation, and that, had it not been for Mr Griffith's efforts, Mr Lee would not have been offered employment with Levo. Get Started emphasises that Levo had not advertised any positions at this time.

[14] Further, the company contends that when Mr Roberts contacted Mr Griffith in February 2018, he had inquired only about 'borrowing' a Get Started worker for a short period, whereas Mr Griffith proposed Mr Lee for a permanent engagement. The company also produced an email message from Mr Roberts, stating that Levo's offer of full-time employment was the direct result of Mr Griffith's intervention.

[15] Mr Lee's submissions concerning the course of events largely reflect those of the company, although he provides some further details, and his characterisation of various matters is different from that of the company. He said that at his meeting with Mr Griffith on 15 February 2018, it was agreed that his redundancy package would be four weeks' pay. He received a letter dated 16 February 2018, confirming that he would be paid 4 weeks' severance in accordance with his statutory entitlements, and that his termination payments would be forwarded to his bank account by 8 March 2018. He agreed that on 20 February 2018, Mr Griffith had told him that there was an opportunity at Levo and that his LinkedIn profile had been sent to Levo. He confirmed that he accepted a job at Levo on 23 February 2018, and commenced working there on or about 12 March 2018.

[16] Mr Lee said in his submissions that on 2 March 2018, Mr Griffith told him that his final payment would be arranged in the coming weeks. Then on 6 March 2018 Mr Griffith called him and said that Get Started would not be processing the redundancy package because he had accepted a job at Levo, and an application had been made to the Commission to reduce his redundancy pay to nil.

[17] Mr Lee emphasised in his submissions that Mr Griffith did not say or suggest to him at any time that the job opportunity at Levo would affect his redundancy entitlement. He said that he was under the impression that the interview at Levo was being organised by Levo with him directly as part of a standard recruitment process. He contended that he understood Mr Griffith to have provided a personal referral to Levo, in his capacity as Mr Lee's former manager, rather than a formal company referral connected with the question of 'other acceptable employment' in s.120 of the Act.

[18] In his submissions, Mr Lee said that he had confirmed with Levo that employment was offered to him solely on the basis of his skills and experience, and that no third party was involved in the decision to offer him employment at Levo. He said that there was a provision in his contract with Levo confirming this fact.

[19] Mr Lee further contended that, had he known that his decision to accept employment at Levo could affect his redundancy entitlement, he would have made a different decision, as he was offered a job by another entity unconnected to any referral by Get Started.

[20] Finally, Mr Lee contended that, although the position at Levo involved working on niche content management systems as he had done at Get Started, it also required direct client interaction and project management, which was not part of his former position. He said that on 20 April 2018, he had resigned from Levo. Mr Lee submitted that he does not consider the role at Levo to have been suitable or aligned to his expectations.

Did Get Started 'obtain' employment for Mr Lee?

[21] In FBIS International Protective Services (Aust) Pty Ltd v MUA,[1] a Full Court of the Federal Court considered the meaning of the word 'obtains' in the context of s.120(1)(b)(i) of the Act. Having noted the definition of the word in the Oxford English Dictionary, the Court concluded that other employment is 'obtained' if it is the result of the 'conscious, intended, acts of the person concerned'.[2] The Court also stated that 'to obtain employment for an individual means to procure another employer to make an offer of employment, which the individual may or may not accept as a matter of his or her choice.'[3] In that case, the applicant employer, FBIS, had done no more than establish contact between the employees and the new employer ACG, such that they were able to participate in a recruitment process. Although many employees did in fact obtain employment with ACG, this employment had not been 'obtained' for them by FBIS.

[22] Mr Griffith did not obtain a guarantee or undertaking from Mr Roberts that Levo would offer employment to Mr Lee. As Mr Lee points out, Get Started was not a joint decision-maker in relation to the offer of employment made by Levo to Mr Lee. When Mr Griffith contacted Mr Roberts about employing Mr Lee, he did not know if permanent employment was even available at Levo. Having suggested the idea of Levo permanently employing Mr Lee, and recommending him to Mr Roberts, Mr Griffith left the matter in Mr Roberts' hands. There was no certainty about any employment for Mr Lee at Levo until Mr Roberts spoke with Mr Lee, considered his company's position, and then made Mr Lee an offer.

[23] In some cases that come before the Commission under s.120 of the Act, it will be possible to say that the applicant employer 'obtained' other acceptable employment as a matter of certainty, such as where there is a commercial arrangement between the employers that the new employer will make particular offers of employment to the first employer's employees. However, I do not read the decision of the Full Court in FBIS as requiring that the first employer achieve certainty of an offer of employment. Returning to the definition of the word 'obtain' in the Oxford English Dictionary, which was relied on by the Full Court, the meaning includes 'to procure or gain, as the result of purpose and effort; hence, generally, to acquire or get.'[4] In my view, Mr Griffith obtained, acquired, or got employment for Mr Lee, as a result of his purpose and effort.

[24] Mr Griffith proposed to Mr Roberts that he consider Mr Lee for employment, either for the overflow work discussed some months earlier, or for any permanent position that might be available at Levo. He did much more than to facilitate an introduction. He recommended Mr Lee for employment, and suggested the idea of permanent employment, which had not previously been in Levo's contemplation. This led Mr Roberts to employ Mr Lee on a permanent full-time basis. In my view, it was Mr Griffith's 'conscious, intended acts' that led to Mr Lee being offered such employment.

[25] As to Mr Lee's contention that Mr Griffith provided a personal, rather than corporate referral to Levo, I would note that Mr Griffith is the managing director of Get Started, and there is no basis to ascribe to his actions some personal motivation which should be disregarded for the purposes of considering whether the company obtained other employment for Mr Lee.

[26] Mr Lee submitted that Levo offered him employment solely on the basis of his skills and experience and that no third party was involved in the decision to offer him employment at Levo. However, in my view it is not necessary for the first employer to be involved in the decision of the new employer to make an offer of employment, in order for it to have 'obtained' other acceptable employment for the employee.

[27] It is necessary then to consider whether the employment which Get Started obtained for Mr Lee was 'acceptable'. The answer to this question might seem obvious; it was evidently acceptable, in the sense that Mr Lee accepted it. In FBIS, the Full Court noted that 'if the (other) employment is not accepted, the question whether that employment was 'acceptable' will then arise.'[5] This suggests that if the employment is accepted, there is no need to consider further whether the employment was 'acceptable'. However, in the matter that was before the Full Court, it was not contested that the other employment was 'acceptable'.[6]

[28] In my view, the fact that a person accepts employment is not necessarily determinative of whether the employment was 'acceptable' for the purposes of s.120. 'Acceptable' means 'able to be agreed to', but it also means 'suitable'. Conceivably, a person might accept employment that was nonetheless not 'suitable', perhaps under protest or caveat, and later seek to resist an employer's application under s.120 to reduce redundancy pay on the basis that the new employment was not 'acceptable'.

[29] It is well-settled that the question of whether other employment is 'acceptable' is to be approached objectively, involving a consideration of a range of matters including terms and conditions of employment and duties.[7] There is no requirement that the new employment be the same as the redundant position, or even closely similar. And although I do not consider the employee's acceptance of the employment to be determinative, it is a strong indicator of it being objectively acceptable.

[30] In this case, Mr Lee accepted the new position voluntarily. He did not know that his acceptance of the employment might affect his redundancy entitlement. However, s.120(1)(b)(i) squarely contemplates that the obtaining of 'acceptable employment' may affect redundancy entitlements. It is hard to see how the possibility of the redundancy entitlement being reduced by virtue of an order under s120 could affect the 'acceptable' status of the other employment. In my view, Mr Lee's acceptance of Levo's offer supports a conclusion that the employment with Levo was 'acceptable'.

[31] Mr Lee contended that the position at Levo was client-facing and involved project management, and for this reason was not of the same type of work that he had previously performed at Get Started. Yet the substance of the role was the same, namely working on niche digital content management systems. Further, Mr Lee's annual salary at Levo was $100,000, whereas at Get Started it had been $95,000. These considerations also indicate that the new employment was acceptable.

[32] Finally, I take note of the fact, discussed below, that Mr Lee was offered another role by a third company but declined it and accepted employment at Levo. This is a further indication of the fact that the employment at Levo was indeed acceptable.

[33] In my view, the employment that Get Started obtained for Mr Lee was 'acceptable other employment' for the purpose of s.120(1)(b)(i).

[34] Having established the jurisdictional facts required by s.120(1), I must now consider whether to exercise my discretion under s.120(2) to reduce the amount of Mr Lee's redundancy pay. In doing so, it is appropriate to balance the conclusion that Get Started obtained other acceptable employment for Mr Lee against any considerations raised by Mr Lee that might tell against the exercise of the discretion in this case.

[35] Mr Lee submitted that Get Started did not inform him that the job opportunity at Levo would affect his redundancy entitlement. However, the employer itself was unaware of the possibility of making an application under s.120 until after Mr Lee's employment had ceased. If Get Started had deliberately misled Mr Lee about its intentions to seek an order under s.120, this would militate against the exercise of the Commission's discretion to grant an order under s.120. But that is not the case here.

[36] Mr Lee contended that he and the company had agreed that the statutory redundancy entitlement would be paid, and that this tells against the exercise of the Commission's discretion. But again, the company was not aware of the possibility of making an application under s.120. Further, the 'agreement' does not appear to me to reflect a contractual arrangement, but rather a shared misapprehension of the statutory position, that is, one that did not take into account s.120.

[37] Mr Lee contends that, had he known that his decision to accept employment at Levo could affect his redundancy entitlement, he would have made a different decision, as he was offered a job opportunity by a different employer. However, Mr Lee must be presumed to have accepted the role at Levo in preference to the other opportunity because he considered it to be more appealing. I appreciate that it must now be a source of regret for Mr Lee that he declined the other opportunity. But even if he had been aware of the possibility of Get Started making an application for an order under s.120, the outcome of such an application could not have been known with any certainty, and Mr Lee may ultimately have made the same decision to accept the role at Levo.

[38] Get Started obtained other acceptable employment for Mr Lee. As well as being a jurisdictional fact, this is a consideration that itself tells in favour of the exercise of the discretion. Mr Lee started work at Levo shortly after his employment with Get Started ceased. The employment at Levo involved a similar role for a higher salary. Taking into account all of the circumstances, I consider that I should exercise my discretion to reduce Mr Lee's redundancy pay to nil.

[39] An order will be issued separately reflecting this decision.

[1] [2015] FCAFC 90

[7] Clothing and Allied Trades Union v Hot Tuna (1988) 27 IR 226 at 230-231; Re Target Retail Agreement 2001 PR916204 at [6]

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