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[2023] FWC 483
General information, not legal advice.
Fair Work Commission
2023-02-27
Original judgment source is linked above.
s.120 - Redundancy pay
(C2023/864; C2023/862; C2023/861; C2023/860; C2023/859; C2023/858; C2023/857; C2023/856; C2023/855; C2023/854; C2023/852; C2023/851; C2023/849)
Variation of redundancy pay - alternative work offered - other employment found to be acceptable - redundancy varied.
[1] Oznorth Services Pty Ltd (the Applicant) has applied pursuant to s.120(2) of the Fair Work Act 2009 (the Act) to have the Fair Work Commission (the Commission) reduce to nil the redundancy entitlement of Mr Stephan Bruun, Mr Rowan Johnston, Mr Richard Mustart, Mr James Walkerden, Mr Gary Brooks, Mr Clive Travers, Mr Clive Lavrick, Mr Timothy Manning, Mr Bernard Jansen, Mr Anthony Herbert, Mr Andrew Olm, Mr Adrian Vassie, and Mr Brendan Tennick (the Respondent/Respondents) who were employees of the Applicant and were offered alternative employment following the end of a contractual agreement with Viva Energy Australia to provide refuelling duties.
[2] Oznorth Services Pty Ltd provide aircraft refuelling and associated services by way of a contract (Services Contract) with Viva Energy Australia.
[3] On 14 November 2022, the Applicant advised Viva Energy Australia they were terminating the Services Contract. The Applicant contacted the new agency and obtained work for each of the staff on substantially the same rates of pay and conditions.
[4] On 13 February 2023, the Services Contract came to an end. Accordingly, each of the Respondents' contracts with the Applicant came to an end. The Respondents were paid all statutory entitlements owed and signed new contracts and commenced in substantially similar roles as they held previously with the new contractor.
[5] On 20 February 2023, the Applicant filed thirteen applications to vary the redundancy pay of the Respondents. These applications were on the basis that Oznorth Services Pty Ltd had obtained acceptable alternative employment for the Respondents.
[6] On 21 February 2023, the applications were allocated to me. The Applicant was directed to provide an aide memoire by 5:00 p.m. on 22 February 2023. A hearing was listed for 11:00 a.m. on 24 February 2023 by Microsoft Teams. The parties were advised that the matters were going to be joined and if there were any objections, they could contact my chambers by email by 5:00 p.m. on 23 February 2023. If no response was received, the hearing would proceed as listed. No response was received from any of the Respondents. The Applicant was represented by Mr Steven Munns, Director of the Applicant. None of the Respondents appeared and an extra twenty minutes was provided to allow the Respondents a chance to contact my chambers if there were any issues. However, no correspondence was received.
[7] The matter for determination is whether the Applicant obtained other acceptable work and if so, should the Commission exercise discretion to vary the redundancy. If a variation was granted, the natural corollary is that I must determine to what extent the redundancy should be varied.
[8] Section 119 and 120 of the Act provide:
(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 not have this entitlement.
Employee's period of continuous service with the employer on termination
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
[9] Section 121 of the Act provides:
121 Exclusions from obligation to pay redundancy pay
(a) the employee's period of continuous service with the employer is less than 12 months; or
(a) incorporate the award term by reference (and as in force from time to time) into the enterprise agreement; and
(b) provide that the incorporated term covers some or all of the employees who are also covered by the award term.
[10] 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.
[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 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)).
[12] The Applicant provided an aide memoire prior to the hearing. It was identified that there were two groups of employees. The first were refuellers, the second were supervisors.
[13] The Respondents who were employed as refuellers were: Mr Bruun, Mr Mustart, Mr Brooks, Mr Travers, Mr Lavrick, Mr Manning, Mr Olm, Mr Vassie, and Mr Tennick. Their role was essentially the same across all nine positions. They were responsible for:
(a) checking serviceability of refuelling vehicles at the commencement of their shift;
(b) checking fuel quality;
(c) decanting fuel from mobile fuel carriers into the aircraft's fuel tanks;
(d) checking flight schedules;
(e) monitoring incoming phone calls and emails for fuel orders;
(f) managing time effectively to ensure on time performance;
(g) assisting generally with compliance and completing tasks otherwise as directed by Viva; and
(h) advising of any defects regarding aircraft or vehicles and assisting with any minor repairs required or other general tasks as directed.
[14] The Applicant negotiated and secured employment for the nine refuellers with the incoming service providers. The Respondents were offered a position with identical duties, rates of pay, hours, conditions of employment, and work location. All nine now work for the incoming service provider. On this basis, the Applicant submits that they found and secured employment for the refuellers, and this was "other acceptable employment" within the meaning of s.120(1)(b)(i) of the Act.
[15] The Respondents who were employed as supervisors were Mr Anthony Herbert, Mr James Walkerden, Mr Rowan Johnson, and Mr Bernard Jansen. Their role required management and supervision of the staff providing aircraft refuelling services, and a degree of interface between the Applicant and Viva Energy Australia.
[16] The Applicant also negotiated and secured employment for the four supervisors. Mr Johnson and Mr Walkerden maintained their duties, wages, hours, conditions, and locations. Mr Jansen was employed as supervisor and agent for the Mackay and Mount Isa sites, resulting in an increase of income of $100,000 per annum. Finally, Mr Herbert has been employed as a refueller resulting in a reduction in seniority and a reduction of income of $8,000 per annum.
[17] For the supervisors Mr Johnson, Mr Walkerden, and Mr Jansen, the Applicant submits that that they found and secured employment and that this was "other acceptable employment" within the meaning of s.120(1)(b)(i) of the Act.
[19] The submission is that the Applicant found Mr Herbert other acceptable employment within the meaning of that phrase as it appears in s.120(1)(b)(i) of the Act. Whilst there has been a reduction in pay and seniority, it is not such that would warrant a finding, on an objective basis, that the Applicant failed to find Mr Herbert other acceptable employment. The work is of a like nature, the employment is secure, and the location has not changed. Pay, whilst reduced, has only slightly reduced. The change in seniority is also minor.
[20] The Respondents were invited to provide oral submissions however none of the Respondents attended the hearing.
[21] In Spotless Services Australia Limited t/as Alliance Catering [2016] FWC 4505 ('Spotless'), Deputy President Sams usefully identified the authorities relevant to "other acceptable employment" and the task to be performed by the Commission:
[60] The question of what constitutes 'other acceptable employment' in the context of a redundancy situation, has been considered by the Commission and its predecessors in many and varied circumstances and industries over a number of years. In Derole Nominees, a Full Bench of the Australian Industrial Relations Commission (AIRC) said at pp 128-129:
'What constitutes "acceptable alternative employment" is a matter to be determined, as we have said, on an objective basis. Alternative employment accepted by the employee (and its corollary, alternative employment acceptable to the employee) cannot be an appropriate application of the words because that meaning would give an employee an unreasonable and uncontrollable opportunity to reject the new employment in order to receive redundancy pay; the exemption provision would be without practical effect.
Yet, the use of the qualification "acceptable" is a clear indication that it is not any employment which complies but that which meets the relevant standard. In our opinion there are obvious elements of such a standard including the work being of like nature; the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.
This approach to the test demonstrates that any alternative employment available to the eighteen former employees of the company cannot be regarded as "acceptable" merely because a number of other former employees took up employment at the new location. The relevant aspects of the job must be examined objectively to determine whether the employment is "acceptable".
The exemption provision imports the notion that an effort of a sufficient kind by an outgoing employer may cause his obligation for redundancy pay to be reduced; a decision by an employee not to co-operate with the employer may well disentitle the employee to all or some of the payment.' (my emphasis)
[61] In Oscar Oscar Group Services Pty Ltd v Lees [2012] FWC 3901 ('Oscar Oscar'), Commissioner Asbury (as Her Honour then was), said at paras [18]-[19]:
'[18] The question of whether alternative employment is acceptable, must be assessed on an objective basis. It is relevant to the assessment that redundancy payments are not made solely for the purpose of assisting employees to find alternative employment. Redundancy payments are intended to tide an employee over during the search for alternative employment, and to compensate the employee for loss of credits for sick leave, long service leave and other entitlements based on length of service. The question of whether previous service with the previous employer is recognised as service with the new employer, will also be relevant.
[19] Other considerations will be whether the alternative employment is of a like nature; a reasonable distance from the previous employment; whether pay and conditions are comparable; hours of work and job security in relation to the new position. The fact that an alternative position does not meet the personal preferences of an employee, may place the right to receive full redundancy pay at risk, where the employee refuses a position that is found to be acceptable on an objective basis.' (my emphasis)
[62] Senior Deputy President Watson in Feltex said at a para [33] and [89]:
'[33] The parties accept, as do I, that matters to be considered in assessing whether alternative acceptable employment has been obtained include matters such as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security, the location of work, continuity of service and accruals and the application of probationary periods. The relevant authorities also demonstrate that this listing of matters is not exhaustive and the question of whether an employment is acceptable alternative employment will be decided on the peculiar facts of a matter. Further, the authorities suggest that acceptable employment is not synonymous with identical employment, although the basis of the 2004 variation of the TCR test case provision suggests that, whilst not identical, terms and conditions should be substantially similar and no less favourable, overall, than the terms and conditions applicable to the employee at the time of the redundancy.
[89] I accept the proposition advanced by Feltex Australia that acceptable alternative employment is not necessarily identical employment and that the AIRC has previously found alternative employment to be acceptable notwithstanding inconvenience to employees and some detrimental alteration to the terms and conditions of employment.'
[63] In Vicstaff Pty Ltd (t/as Stratco) v May (2010) 204 IR 233 ('Vicstaff'), Bissett C said at paras [29]-[30]:
'[29] The determination of whether or not alternative employment is acceptable must be determined objectively and not subjectively from the perspective of the employer or employees. That the alternative employment may be rejected does not objectively make it unacceptable nor does the fact that the employment was offered make it, by virtue of the offer, acceptable. Further, that one of the persons out of a group may have accepted the employment does not make the employment acceptable for the others in the group. The reasons for the acceptance of alternative employment are many and varied and general conclusions should not be drawn from a particular circumstance.
[30] It is therefore incumbent upon the employer (Vicstaff) in this matter to demonstrate that the alternative employment is acceptable taking into account all matters relevant in such a consideration. Had the alternative work been considered acceptable to the individuals one imagines they would have accepted the work offered.'
[64] In DRW Investments t/as Wettenhalls v Timothy Richards & Others [2016] FWC 461, I said at para [183]:
'[183] Notwithstanding the above general principles, whether the alternative employment is acceptable, will likely include consideration of the following matters:
This list is not exhaustive. There may be other relevant factors.'
[65] The above decisions have some common features, including:
[22] The question remains whether the offer by the Applicant was on terms and conditions no less favourable than the terms and conditions that the Respondents experienced prior to the restructure.
[23] The proposed roles do not have to be identical and in considering this the Commission must determine the matter objectively weighing up aspects of the role that include duties, conditions, pay level and location to mention some of them.
What constitutes "acceptable alternative employment" is a matter to be determined, as we have said, on an objective basis. Alternative employment accepted by the employee (and its corollary, alternative employment acceptable to the employee) cannot be an appropriate application of the words because that meaning would give an employee an unreasonable and uncontrollable opportunity to reject the new employment in order to receive redundancy pay; the exemption provision would be without practical effect.
Yet, the use of the qualification "acceptable" is a clear indication that it is not any employment which complies but that which meets the relevant standard. In our opinion there are obvious elements of such a standard including the work being of like nature; the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.
[25] A further explanation on this point was put forward in Von Bibra Robina Autovillage Pty Ltd [2007] AIRC 397 by Richards SDP, who adopted the principles in Derole Nominees and said at [26]:
"[26] In contrast, the objective test of acceptability appears to be that the alternative work bears a sufficient comparability to the original work and is not unreasonably removed from the employee's original duties, skills set, qualifications, experience and other terms and conditions of employment. The test is not whether or not the employee is capable of carrying out the new employment as such, it is whether there is sufficient correlation between the relevant indicia of the current work and the alternative employment as proposed."
[26] Having regard to the above authorities, I consider the employment provided to the refuellers does constitute acceptable alternative work within the meaning of s.120(1)(b)(i) of the Act. The refuellers were employed in a role with identical duties, rates of pay, hours, conditions of employment, and work location. As all nine now work for the incoming service provider and in the absence of submissions and evidence from the Respondents, I will reduce the redundancy to zero.
[27] Regarding the employment provided to Mr Johnson and Mr Walkerden, I find they were also provided with acceptable alternative work within the meaning of s.120(1)(b)(i) of the Act. As they were employed in a role that was substantively in form and function the same role, I will reduce the redundancy to zero.
[28] For Mr Jansen, he maintained his role and was also employed as agent for the Mackay and Mount Isa sites. According to the submissions provided by the Applicant, Mr Jansen is being compensated for the extended duties. As such, I find he was also provided with acceptable alternative work within the ambit of s.120(1)(b)(i) of the Act. As such, I will reduce his redundancy to zero.
[29] Regarding Mr Herbert, the Applicant secured a role where there was a reduction in pay and seniority. I accept the Applicant's submission that the employment need not be identical and may involve detrimental alterations to the terms and conditions of their employment. On assessment of Mr Herbert's new role, the work is of a like nature, the employment is secure, and the location has not changed. In the absence of any submissions or evidence from Mr Herbert, I find that Mr Herbert was provided with acceptable alternative work. I will reduce his redundancy to zero.
[30] Taking into account all of the circumstances, I consider that I will exercise my discretion to reduce the Respondents' redundancy pay to zero. I Order accordingly.
Printed by authority of the Commonwealth Government Printer
(2010) 204 IR 233
(1990) 140 IR 123