Fair Work Act 2009

s.120 - Redundancy pay

Southern Cross Protection Pty Ltd T/A Southern Cross Protection

[1] On 23 November 2017, Southern Cross Protection Pty Ltd T/A Southern Cross Protection (SCP) applied for an order under s.120 of the Fair Work Act 2009 (the Act) to reduce the redundancy entitlement of Mr Mark Richmond. The application is made on the basis that SCP obtained other acceptable employment for Mr Richmond.

[2] Mr Richmond worked at SCP from 2 December 2013 to 1 December 2017 and is entitled under s.119 of the Act to seven weeks' redundancy pay, being $4,568.20. SCP have applied to reduce the amount to $652.60, which is equivalent to one weeks' remuneration at Mr Richmond's base rate of pay.

[3] Mr Richmond opposes the application and asserts SCP did not obtain other acceptable employment for him, but rather his new employment was the result of a 'friendly gesture.'

[4] Mr Richmond was employed by SCP in the position of Customer Service Officer. SCP, following a restructure of the business, changed the position of Customer Service Officer to Loss Prevention Officer, the latter of which requires a security licence. Employees affected by this change were advised in or around November 2016 of the new accreditation requirement for the position.

[5] Mr Richmond is not presently able to obtain a security licence.

[6] On 23 November 2017, Ms Myriam Novak (State Manager, Victoria) said she spoke with Mr Richmond to confirm his role was being made redundant as of 1 December 2017. Mr Richmond was provided with a letter, confirming one week of notice was to be worked and there would be two weeks' pay in lieu of notice.

[7] Ms Novak said Mr Richmond's final payment, including annual leave entitlements, would be made in the week commencing 11 December 2017. At the hearing, Mr Richmond confirmed he received this payment and it was agreed between the parties that upon termination, Mr Richmond's accrued but untaken personal/carers' leave totalled 33.05 hours.

[8] 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.

[9] 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

(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 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."

[10] On 7 December 2017, Ms Novak provided written submissions on behalf of SCP.

[11] SCP submitted that 13 months previously (November 2016), all non-licenced employees were advised that SCP was changing the customer service roles to security licenced roles and that if staff were willing to get their licence, SCP would support them in doing so. Specifically, SCP submitted Mr Rob Keszler (State Manager for South Australia) spoke with Mr Richmond in November 2016 about Mr Richmond obtaining his security licence so that he may remain engaged by the company. Mr Richmond advised Mr Keszler he may not be able to obtain a licence. SCP referred Mr Richmond for advice from Specialised Career Solutions. Correspondence from Specialised Career Solutions to SCP noted during a telephone discussion between it and Mr Richmond, Mr Richmond said he did not want to pursue a Security Course as the likelihood of becoming licenced was very minimal.

[12] SCP said on 6 November 2017, Mr Richmond was provided with notice that his role would be ending on 30 November 2017 and that there were no other roles in the business for him.

[13] SCP submitted an Account Manager, Mrs Meegan Wolthers, who had been assisting with supervising Mr Richmond, was aware his role was coming to an end. Mrs Wolthers approached Mr Keszler to advise there was a possibility of Mr Richmond being employed at her husband's company, Bowden Printing, as he seemed to have the skill set required for a position which was opening there. SCP said Mr Keszler was supportive of this and asked Mrs Wolthers to put Mr Richmond in touch with her husband.

[14] Ms Novak said on 12 November 2017, Mr Keszler "reached out" to Mr Richmond, as he was aware he had attended an interview at Bowden Printing. Mr Keszler told Mr Richmond if he wanted to leave SCP early to secure the new role, he would not be prevented from doing so.

[15] SCP said Mr Richmond commenced his employment with Bowden Printing on 4 December 2017.

[16] SCP submitted Mr Richmond was aware for approximately 13 months his role would eventually cease. It said it attempted to upskill him, however were unable to do so due to Mr Richmond's restrictions. SCP submitted Mr Richmond was out of work for three days.

[17] On 23 November 2017, Mr Richmond submitted the following:

"Southern cross are claiming they have tried finding myself alternative rolls [sic] of employment which is false. An[o]ther general employee has mentioned knowing a position available at an unrelated company I could apply for and management has caught wind and now consider the company apparently helping myself with alternative employment."

[18] In reply to the 7 December 2017 submissions of SCP, Mr Richmond acknowledged that 13 months previously, he was advised of a restructure at SCP. He said since that time, he made many requests about his precise finish date to prepare for his and his family's future. Mr Richmond said in November 2016, he advised Mr Keszler he was restricted from obtaining his security licence until 24 December 2018 and he would like alternative roles until then.

[19] Mr Richmond said he did meet with Specialised Career Solutions and that after follow-up calls with them, it was decided the risks outweighed the gains. Mr Richmond said applying for licensing, and having it denied, would cost him potentially a few thousand dollars.

[20] Mr Richmond said he spoke with Mr Keszler on 6 November 2017 and was informed he would finish with SCP on 1 December 2017. Mr Richmond said notice was given to him on 23 November 2017.

[21] Mr Richmond said his last shift was on 29 November 2017, though he did not realise that would be his last day until just prior to finishing that shift and looking at his roster.

[22] Mr Richmond said Mrs Wolthers mentioned to him an upcoming position he might apply for at her husband's company and that she passed on his resume. Mr Richmond said he had discussions with Bowden Printing and was advised he would be a very likely candidate when the position became available. Mr Richmond said the position became available on 29 November 2017 and he was invited to attend an interview on 1 December 2017. Following the interview, Mr Richmond said he was asked to start, on a trial basis, at Bowden Printing on 4 December 2017.

[23] Mr Richmond said he understood the mention of the position was in the nature of a friendly gesture and does not amount to SCP assisting him with alternative employment.

[24] Following receipt of the above submissions, I caused correspondence to be sent to the parties which noted previous cases have considered what "obtains other acceptable employment for the employee" means. The following was set out in the correspondence:

"The Full Court of the Federal Court in FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia [2015] FCAFC 90 said of "obtain"; in the sense of an employer obtaining "other acceptable employment" for an employee that it:

"[20] ... must be the result of the conscious, intended, acts of the person concerned, as distinct from, for example, coming into the possession of something by gift or inheritance. Moreover, we cannot perceive any reason why what is described as the "general" connotation of the word - "to acquire, get" - should not be regarded as a perfect fit for the purposes sought to be achieved by the relevant provision in the standard award clause before this provision became the subject of legislation."

The Full Bench in Australian Commercial Catering Pty v Powell and Togia; Powell v Australian Commercial Catering Pty Ltd ( [2016] FWCFB 5467) subsequently summarised the meaning of "obtains" as follows:

"[37] ... The employer "obtains" other acceptable employment when it acquires or gets the employment by its conscious, intended acts."

[25] In order that I be in a position to finally determine whether or not SCP had obtained other acceptable employment for Mr Richmond, in the sense discussed previously by the Federal Court and the Fair Work Commission, the parties were required to advise me in relation to the nature of the role played by Mrs Wolthers and address the question as to whether SCP had obtained other acceptable employment for Mr Richmond.

[26] On 15 December 2017, Ms Novak, on behalf of SCP, provided an email from Mrs Wolthers outlining her role with the company and the assistance she provided to Mr Richmond. Mrs Wolthers' email said that as part of her role, she conducts store visits and meets with the store managers of JB Stores around Adelaide, as well as customer service officers and loss prevention officers in her supervisory capacity. Mrs Wolthers said she conducts fortnightly toolbox meetings with all employees working in a store and she is regularly contacted by employees for any clarification required and for general support. Mrs Wolthers said she met Mr Richmond through providing support to him as an employee of SCP. She said he was a good employee whom she understood could not continue to work at JB Melrose Park due to licence restrictions. Mrs Wolthers said "[i]n the interest of him, his family and the company I arranged an interview for him and gave him a good verbal reference."

[27] Ms Novak did not provide any further submissions regarding s.120(1)(b)(i) of the Act, stating:

"Southern Cross Protection will accept the decision made by [t]he Deputy President on the matter. Whilst seeking the variance to redundancy, it is based on the fact that SXP tried to keep Mr Richmond employed and would have it [sic] he could have secured a license. Once this was realized introductions were made to ensure Mr Richmond was not unemployed.

[28] In response, Mr Richmond said he had no further comments.

[29] Following receipt of the material, I advised parties I would convene a telephone hearing, which proceeded on 30 January 2018.

[30] Ms Novak, Mrs Wolthers, Mr Keszler and Mr Richmond attended the telephone hearing.

[31] Mrs Wolthers tendered her statement[1] referred to at [26] above. Mrs Wolthers said although she does not have any official direct reports, she considers she did supervise Mr Richmond in some capacity as she ran the regular toolbox meetings and was the first point of contact with SCP. Mrs Wolthers advised she reports to Mr Keszler. She said she asked Mr Keszler if there would be a problem in Bowden Printing hiring Mr Richmond and was advised there would be no problem and she should speak to Mr Richmond about it. Mrs Wolthers said she asked Mr Richmond if he would be interested in a role at Bowden Printing, to which he said he was, and she forwarded his resume to Bowden Printing, arranged an interview and gave a "very good verbal reference." In cross-examination, Mrs Wolthers said she could not be sure whether she spoke to Mr Keszler or Mr Richmond first about the opportunity, as the conversations were happening via text message at the same time.

[32] Mr Keszler said Mrs Wolthers is an Account Manager and has stepped into a vacant supervisor/senior role in South Australia and will continue in that role. He said her role in relation to Mr Richmond and other employees was a supervisory one. Mr Keszler said Mrs Wolthers approached him about the role at Bowden Printing and asked him if it would be a good idea to put Mr Richmond in contact with Bowden Printing, which he said he was more than happy for Mrs Wolthers to do. He said this conversation occurred in early November 2017.

[33] Of the conversation referred to at [14] above, Mr Keszler said he telephoned Mr Richmond on 12 November 2017 because he knew Mr Richmond had attended an interview. He said Mr Richmond told him that he did not know the outcome of the interview. Mr Keszler said he then told Mr Richmond that he would not be required to give two weeks' notice if the position came up earlier and that SCP would be happy to accept a shorter notice period. Mr Keszler said he assured Mr Richmond in this conversation that he was not a burden to the company.

[34] Mr Richmond said Mrs Wolthers raised the storeman role with him via text message between 27 October and 30 October 2017. He said he then spoke to Mrs Wolthers via telephone, got more information about the opportunity and said he would supply his resume to Mrs Wolthers to be passed onto her husband. Mr Richmond confirmed Mrs Wolthers performed a supervisory role over him while he was employed at SCP.

[35] Mr Richmond confirmed he commenced with Bowden Printing on 4 December 2017 as a casual employee with a probation period of three months. He said he remains employed by Bowden Printing and works Monday to Friday, 7.30am to 3.30pm, earning $25 per hour. Mr Richmond said he did not earn any income over the Christmas period when he was on holidays for two weeks. Mr Richmond said Bowden Printing is 15 minutes closer to his home than the JB Hi-Fi store he worked at.

[36] In the 2004 Redundancy Case,[2] the Full Bench of the Australian Industrial Relations Commission confirmed the purpose of redundancy pay is to compensate an employee for matters such as the trauma associated with the termination of employment, the loss of non-transferable credits such as sick leave, the loss of security and seniority, lower job satisfaction and diminished social status and conditions.

[37] In applications such as these, the onus lies on the employer company seeking the exemption from redundancy payment obligations and the discretion exists for the Commission to make an order to reduce or remove an employee's statutory entitlement to redundancy pay to an amount, which may be nil, that it considers appropriate.

[38] The Full Bench of the Commission in Australian Commercial Catering Pty Ltd v Powell and Togia; _Powell v Australian Commercial Catering Pty Ltd[3]_outlines the approach that I intend to follow in considering SCP's application to reduce Mr Richmond'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) 8 IR 34 to introduce an entitlement to severance pay for all employees under federal awards whose employment had been terminated because of redundancy".[4] 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.[5] The determination of whether alternative employment is acceptable requires an assessment and value judgment on the part of the decision-maker.[6] The employer "obtains" other acceptable employment when it acquires or gets the employment by its conscious, intended acts.[7]

[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.[8] 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

[39] I am satisfied Mr Richmond is entitled to be paid an amount of redundancy pay. His employment was terminated by SCP because it no longer required the Customer Service Officer role performed by Mr Richmond to be done by anyone.

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

[40] I am also satisfied SCP obtained other acceptable employment for Mr Richmond, in that it acquired or got the employment for him by its conscious, intended acts.

[41] Firstly, I am satisfied Mrs Wolthers, who performed a supervisory role with oversight of Mr Richmond during his employment at SCP, discovered and identified the job opportunity at Bowden Printing, ascertained from Mr Richmond that he would be interested in working there, passed on his resume to Bowden Printing, arranged an interview and gave Mr Richmond a verbal reference. These were conscious, intended acts which resulted in Mr Richmond obtaining employment there. Her actions were approved by Mr Keszler.

[42] Secondly, I am satisfied the nature of the employment at Bowden Printing is acceptable. While currently on a casual basis, the rate of pay is comparable to Mr Richmond's rate of pay at SCP ($25 per hour at Bowden Printing, compared with $20.08 per hour at SCP) and he is offered more hours of work. In addition, Mr Richmond's travel time has reduced, the premises of Bowden Printing being 15 minutes closer to his home than his previous place of employment.

Section 120(2) of the Act

[43] Having concluded that s.120 of the Act is applicable, I must consider whether it is appropriate to reduce the amount of redundancy pay that is payable to Mr Richmond. In all the circumstances of this matter, I consider I should. Mr Richmond was aware approximately 12 months in advance that his employment would likely be terminated on the basis of redundancy. He had time to prepare. Mr Richmond was offered the opportunity to obtain a security licence and company support to do so, but declined it. He was also offered advice from Specialised Career Solutions, on referral by SCP. Mr Richmond's tenure at SCP was 4 years and no particular seniority or status issues associated with his SCP role were raised. Obviously the basis of Mr Richmond's employment has changed from permanent to casual, but balanced against this is the greater number of hours he is now being offered. Finally, I note Mr Richmond was able to commence employment with Bowden Printing just five days after finishing with SCP.

[44] Having regard to these matters and Mr Richmond's 33.05 hours of accrued but untaken personal/carers' leave upon termination, I consider it appropriate to reduce Mr Richmond's redundancy pay to the equivalent of two weeks' remuneration at the base rate of pay he was receiving at SCP. This equates to $1,305.20 and will therefore be the amount of redundancy pay to which Mr Richmond is entitled under s.119 of the Act.[9]

[45] The amount of redundancy pay to which Mr Richmond is entitled is reduced to $1,305.20 and an order to this effect will be issued with this decision.

Ms M Novak for Southern Cross Protection Pty Ltd T/A Southern Cross Protection.

[2] [2004] AIRC 287; (2004) 129 IR 155.

[3] [2016] FWCFB 5467.

[4] [2015] FCAFC 189 at [12].

[5] Clothing & Allied Trades Union of Australia v Hot Tuna Pty Ltd (1988) 27 IR 226; Clothing Trades Award 1982(1) [1990] AIRC 980; (1990) 140 IR 123.

[6] [2015] FCAFC 189 at [45].

[7] FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia [2015] FCAFC 90 at [20].

[8] Ibid at [21]; [2015] FCAFC 189 at [42], [60].

[9] Section 120(3) of the Act.

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