Fair Work Act 2009

s.120 - Redundancy pay

O'Brien Group Australia Pty Ltd Trading as O'Brien Group Australia

Application for variation of redundancy pay - acceptable employment not obtained - application dismissed.

• [1] This decision concerns one of eight related applications made by O'Brien Group Australia Pty Ltd (O'Brien's) under s.120(2) of the Fair Work Act 2009 (Cth) (the Act) to have the Fair Work Commission (the Commission) reduce the redundancy entitlements of their employees whose positions have become redundant as a result of O'Brien's unsuccessful bid to renew their catering contract with AAMI Park Stadium (AAMI Park), at Melbourne Olympic Park (MOP). GEMA Group (GEMA) was successful in their bid for the AAMI Park contract. I have decided to issue separate decisions in each matter. The eight decisions are necessarily very similar.

• [2] Mr Roger McGann worked for O'Brien's from 3 September 2014 to 31 December 2024 (10 years and 3 months). At the time he was made redundant, he was employed on a full-time basis as Head Chef primarily based at AAMI Park. Pursuant to s.119 of the Act and the related award, he is entitled to 12 weeks' redundancy pay. On 24 December 2024, O'Brien's filed an application to reduce the amount to nil.

• [3] ‑‑Mr McGann opposes the application and asserts that O'Brien's has not obtained acceptable employment for him.

• [4] O'Brien's is a company incorporating a range of businesses including the significant provision of hospitality services to major venues. O'Brien's provided catering services at AAMI Park and was not successful in its tender for the renewal of the contract. GEMA, the successful tenderer, was announced to the public via an online news source on 24 September 2024.

• [5] In late September 2024, Mr Daniel Smith (Chief Operating Officer at O'Brien's) had discussions with employees concerning possible employment options. This was followed on 25 September 2024 with an email from Ms Brittany Christy (Human Resources Manager at O'Brien's) which included a statement that 'one-on-one' meetings would be scheduled to discuss these pathways.

• [6] O'Brien's conducted 'transition discussions' with employees from 10 to 14 October 2024. Mr McGann's discussion took place via telephone on 10 October 2024.

• [7] Around the middle of October, Mr McGann participated in an introduction and informal interview with GEMA that had been facilitated by O'Brien's.

• [8] O'Brien's followed up with Mr McGann on 24 October 2024. Mr McGann, who had just returned from annual leave, advised O'Brien's that he would personally reach out to GEMA and have discussions with them.

• [9] On 5 November 2024, Mr McGann sent an email to Mr Dwane Goodman (Chief Operating Officer at GEMA) to introduce himself and explain his position, conditions of employment and expectations going forward. He advised that he would be overseas on annual leave from 9 December 2024 to 10 January 2025.

• [10] Mr McGann did take the leave as described above and returned to Australia on 11 January 2025.

• [11] Whilst Mr McGann was on leave, he says that he did not receive email correspondence from O'Brien's because the latter was using a superseded email address. O'Brien's disputes this and says that all correspondence, other than the 16 January 2025 reference letter, had been sent to Mr McGann's work email.

• [12] Mr McGann was emailed a letter dated 26 November 2024 titled 'Termination of Employment: Redundancy'. This correspondence, amongst other things, confirmed that redeployment options remained open for his consideration, and that O'Brien's would be informing him about an application they would be submitting to the Commission.

• [13] On 24 December 2024, O'Brien's applied to the Commission to vary Mr McGann's redundancy to nil under s.120 if the Act.

• [14] O'Brien's existing contract to provide catering services at AAMI Park ended on 31 December 2024. Accordingly, on 31 December 2024 the employees, including Mr McGann, were terminated from O'Brien's.

• [15] Mr McGann accepted the role of Head Chef at GEMA and at the date of the hearing was still actively employed in this role.

• [16] By 16 January 2025, final pay and leave entitlements were processed, with a notification of an upcoming conference with the Commission, and employment references provided to employees.
• [17] On 22 January 2025, a conference for this matter was held. I caused directions to be issued, and the matter proceeded to an in-person hearing on 25 March 2025, and all but one of the related matters were heard consecutively, but not concurrently.

• [18] At the hearing, Ms Christy and Mr Smith gave evidence for O'Brien's and Mr McGann gave evidence as the Respondent.

• [19] The question for consideration in the present matter is whether O'Brien's 'obtained' other acceptable employment for Mr McGann, and if so whether I should exercise my discretion to reduce the amount of Mr McGann's redundancy pay.

• [20] In support of their application that they obtained other acceptable employment for Mr McGann, O'Brien's submissions include the following.

• [21] O'Brien's submits that they took reasonable and positive steps to obtain employment for Mr McGann, and the other employees, and therefore his redundancy entitlement ought be reduced to nil.

• [22] Mr Smith claims that the employees, including Mr McGann, were not required to attend a formal interview or provide evidence of training, and their positions were not externally advertised.

• [23] In support of this application, O'Brien's submits that they intervened to communicate with Mr McGann when he was not contactable, and that without this direct intervention from O'Brien's, it is likely that Mr McGann's position would have been advertised externally.

• [24] O'Brien's submits that they engaged in collaborative work with GEMA to facilitate the hiring of Mr McGann, and other employees, for a smooth transition to GEMA. Further, that on 24 September 2024, a meeting was held with GEMA to facilitate the changeover of the AAMI Park catering contract, manage employee transitions, and there was general agreement to work collaboratively together.

• [25] Further, a meeting was held on 3 October 2024 between O'Brien's and GEMA regarding the organisational structure of the business and employee transitions. The discussion included employees' skills and recommendations of employees. It is Mr Smith's evidence that GEMA invited all but one of O'Brien's employees to be considered for employment with GEMA.

• [26] O'Brien's submits that in their transition discussion with Mr McGann, on 10 October 2024, he agreed for his contact details to be to be referred to GEMA.

• [27] In mid-October 2024, O'Brien's submits that it facilitated an onsite visit by GEMA to AAMI Park for in-person introductions to consult with employees. O'Brien's also submits that subsequently it performed 'check-in' calls with employees to keep them informed on discussions about the Marvel Stadium tender and offers from GEMA. It is O'Brien's evidence that Mr Fielder informed GEMA that Mr McGann was on leave but was 'eager to chat'.

• [28] Mr Smith gave evidence that on 26 October 2024, he corresponded with Mr Goodman about salaries and performance of individual team members, and then followed up with GEMA on 6 November 2024 about the status of employment offers.

• [29] On 15 November 2024, Ms Christy sent an email to employees acknowledging the delay in offers and advising of pending correspondence regarding employment pathways and entitlements.

• [30] Asset counts were discussed with GEMA on 18 November 2024, and discussions occurred between O'Brien's and GEMA including why Mr McGann had made no contact with GEMA outside the 5 November 2024 email. It is Mr Smith's evidence that he spoke with GEMA about Mr McGann in particular.

• [31] By 23 December 2024, an email from GEMA confirmed that Mr McGann, and other employees from O'Brien's, had been employed by GEMA. Prior to this, Mr Smith was unaware that Mr McGann had accepted an offer for employment from GEMA. Mr Smith explained at the hearing that he was aware of the other employees' offers on or around 10 December 2024.

• [32] O'Brien's contends that it obtained other acceptable employment for Mr McGann within the meaning of s.120 of the Act. It says that Mr McGann was offered a position in the same position as Head Chef, at the same level, for the same money - if not better, doing the same work, with the same responsibility, and at the same location, but employed by GEMA as opposed to O'Brien's. Mr McGann interviewed for and accepted his role at O'Brien's recommendation.

• [33] Mr McGann's submissions and evidence included the following.

• [34] Mr McGann submits that O'Brien's did not obtain employment for him because

Mr McGann independently approached and negotiated with GEMA without direct involvement from O'Brien's and was required to apply for the position and negotiate his own salary and employment terms.

• [35] Mr McGann submits, and gave evidence, that he took sole responsibility for the interview process, including by having conversations with Mr Craig O'Shaughnessy (Executive General Manager of GEMA), and that on 5 November 2024, independent of O'Brien's, Mr McGann sent a letter to Mr Goodman introducing himself and detailing some of the conditions of his current employment and his salary expectations.

• [36] Mr McGann submits that O'Brien's did not 'obtain' employment for him with GEMA because, amongst other things, O'Brien's was not a 'strong moving force behind the creation of alternative employment opportunity' but instead simply facilitated the process. O'Brien's did not take positive steps to ensure the employment was secured for Mr McGann. Further, that obtaining employment requires an employer to 'take proactive and decisive steps to secure a role for the employee', that there must be a binding offer ensured by employer, not just assistance in application process.

• [37] Mr McGann submits that merely facilitating an interview or providing guidance on salary expectations 'falls short of the statutory threshold required to justify a reduction in redundancy entitlements'.

• [38] Mr McGann submits that there was no written agreement with GEMA and O'Brien's regarding the employment of redundant employees and that O'Brien's employees were treated no differently than those applying at a public level.

• [39] Mr McGann submits that O'Brien's failed to discharge its burden under s.120(1)(b)(i) of the Act and that he secured the new role independently. Further, that Mr McGann is entitled to the full redundancy pay of $30,461.54, and that O'Brien's have the means to pay redundancy entitlements pursuant to the Act_._

• [40] Mr McGann submits that his employment with GEMA is not other 'acceptable' employment.

• [41] Mr McGann submits that his work environment changed materially and now involves more hands-on work due to a reduction of employees in his team, whereas previously he was 'engaged in broader venue operations'. His evidence is that he was actively involved in setting up the new wing at the GMHBA Stadium in Geelong and implementing new processes.

He submits that, irrespective of any peripheral involvement by O'Brien's, these responsibilities have significantly diminished. Mr McGann also submits that his loss of continuity of service, especially at his age, is a significant loss to him.

• [42] Section 119 of the Act provides a statutory right to redundancy pay in amounts calculated based on an employee's continuous service with the employer.

• [43] Section 120 of the Act provides as follows:

(a) an employee is entitled to be paid an amount of redundancy pay by the employer because of section 119; and

(b) the employer:

(i) obtains other acceptable employment for the employee; or

(ii) cannot pay the amount.

(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 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. 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.

• [44] The Full Bench of the Fair Work Commission in Australian Commercial Catering Pty Ltd v Powell and Togia; Powell v Australian Commercial Catering Pty Ltd [2016] FWCFB 5467, outlines the approach that I intend to follow in considering O'Brien's application to reduce Mr McGann's redundancy pay:

[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 34 to introduce an entitlement to severance pay for all employees under federal awards whose [2021] FWC 3593 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.

[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.

[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).

Section 119(1)(a) of the Act

• [45] There is no dispute that Mr McGann's position with O'Brien's is redundant and therefore he would ordinarily be entitled to redundancy pay pursuant to s.119(1) of the Act. His employment was terminated by O'Brien's because it no longer held the contract for AAMI Park, and accordingly no longer required Mr McGann's employment as Head Chef at that location.

Section 120(1)(b)(i) of the Act

• [46] As to whether O'Brien's 'obtained' other acceptable employment for Mr McGann, I am not satisfied O'Brien's acquired or 'got' the employment for Mr McGann with GEMA by its own conscious, intended acts. O'Brien's encouraged employees to 'lean into their [GEMA's] processes'. As Ms Christy observed in her email to employees on 15 November 2024, the matter of employment offers from GEMA was 'largely out of our [O'Brien's] control'. I accept that O'Brien's followed up enquiries with GEMA about Mr McGann's employment, made contact with Mr McGann for GEMA, when the latter could not contact him, and provided assistance, advocacy, and positive references, but I am not satisfied that this amounts to procuring employment for Mr McGann with GEMA. It is assistance, but falls short of procurement.

• [47] I am not convinced by Mr McGann's evidence that he was 'solely' responsible for obtaining employment with GEMA.

• [48] The roles available at GEMA were within GEMA's gift and on the evidence it appears that O'Brien's was not even aware that an employment offer had been made to Mr McGann at the time it was made.

• [49] O'Brien's attempted to facilitate a number of employment options for employees including those that may have arisen out of the Marvel Stadium tender. O'Brien's was hoping employees would be offered employment at GEMA, but interestingly also kept the door open to redeploy them at Marvel Stadium.

• [50] Having found that O'Brien's did not obtain Mr McGann's employment with GEMA, it is not necessary to determine the issue of whether this employment was 'other acceptable employment'.

• [51] With regard to O'Brien's redeployment offer to Mr McGann, the choice of three different positions based in Brisbane, I do not consider these to satisfy the requirements of 'other acceptable employment', the legal principles of which are well established. In addition to requiring Mr McGann to uproot his family and relocate 1,770 km away, the positions offered were significantly junior to the position Mr McGann held with O'Brien's. Although clearly obtained by O'Brien's, as the Brisbane employment offers were within their existing operations, O'Brien's itself determined the positions unsuitable because Mr McGann's skills surpassed the requirements for these positions.

• [52] The application seeks an order to reduce the amount of redundancy to nil on the basis that O'Brien's obtained other acceptable employment for Mr McGann. As I am not satisfied that O'Brien's obtained other acceptable employment, I decline to reduce the redundancy pay to which Mr McGann is entitled to under s.119 of the Act and dismiss the application.

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