s.120 - Redundancy pay

Hannah's House WA Inc. Trading AS Hannah's House

Variation of redundancy pay - alternative work obtained - alternative work not acceptable alternative employment - application dismissed.

• [1] Hannah's House WA Inc. (the Applicant) has applied pursuant to s.120(2) of the Fair Work Act 2009 (the Act) to have the Fair Work Commission (the FWC) reduce the redundancy entitlement of Rebecca Healy to one week's pay.

• [2] 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 Act.

• [3] 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)).

• [4] In this matter, the Applicant had essentially moved Ms Healy from a permanent role into a casual role. The rate of pay increased from the permanent rate to the casual rate. While the hours of work were initially the same, the Applicant noted that the number of hours would likely decline in the future. In terms of redundancy being a case where the employee's job is no longer required, I am satisfied that in this instance, the amount of work had declined such that the previous hours Ms Healy had worked were no longer required and as such her position itself was redundant. The Applicant confirms this in the answer to question 2.3 of its Form F45A application form. Ms Healy was therefore entitled to a redundancy payment.

• [5] The Applicant stated that it anticipated Ms Healy would accept the new role. Notwithstanding this, on 23 June 2025 I sent an email seeking comments from Ms Healy regarding the change. At first, she did not respond and so a further email was sent to her on 11 July 2025. Later that day Ms Healy responded, indicating that the information provided by the Applicant was correct but that her hours had already been reduced to 19 per fortnight.

• [6] An appropriate approach to consideration of an application under s.120 was set out by a Full Bench of the Commission in Australian Commercial Catering Pty Ltd v Powell and Togia; Powell v Australian Commercial Catering Pty Ltd where the Full Bench found as follows (citations removed):

"[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."

"[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. 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."[1]

• [7] As to the proper test to be applied to determine if the position obtained by the employer is acceptable alternative employment, in Clothing & Allied Trades Union of Australia v Hot Tuna Pty Ltd a Full Bench of the Australian Conciliation and Arbitration Commission stated as follows:

"...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."[2]

• [8] In the present case, while the Applicant has obtained the employment, I am not persuaded that the move from permanent employment to casual employment is acceptable alternative employment. While there is an increase in base rate this is offset by the loss of paid leave and public holidays and the certainty of hours. Of most concern is the loss of certainty regarding the hours to be worked each week. It appears from the advice received from Ms Healy that the Applicant's prediction that hours would reduce has already materialised and she is now working roughly 9.5 hours a week.

• [9] In those circumstances I formed a view that the casual role is not acceptable alternative employment and as such no reduction should be allowed to the redundancy entitlements. Having formed this view, I emailed the Applicant to advise of my thinking and inviting them to make any further submissions they wished to make. No response had been received by the appointed time. Given this, I order that the application made by the Applicant is dismissed.

[1] Australian Commercial Catering Pty Ltd v Powell and Togia; Powell v Australian Commercial Catering Pty Ltd [2016] FWCFB 5467.

[2] Clothing & Allied Trades Union of Australia v Hot Tuna Pty Ltd (1988) 27 IR 226 (Munro and Peterson JJ, Leary C) at 230-231.

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