Fair Work Act 2009

s.120 - Redundancy pay

[1] This decision concerns an application by The ORS Group Pty Ltd (the Applicant or ORS) to reduce the amount of redundancy pay to which an employee, Ms Lixi (Hannah) Zhang (Ms Zhang), is entitled under section 119 of the Fair Work Act 2009 (the Act).

[2] The parties were directed to provide submissions and witness statements regarding this matter.

[3] ORS is involved in workplace rehabilitation, injury prevention, disability, psychological and training services. ORS offers a range of services to injured workers, people with disability, employers and insurance agents.

[4] Ms Zhang has been employed by ORS for approximately five years.

[5] Ms Zhang's employment was covered by the Labour Market Assistance Industry Award 2010 [MA000099].

[6] At the time of her employment ending she was employed as an Employment Consultant (Disability Management Service Caseload).

[7] Ms Zhang worked at Hurstville, New South Wales. Her salary was $60,180 per annum and she was employed full-time.

[8] ORS made a decision to downsize the area in which Ms Zhang worked and advised her that her position would be made redundant.

[9] On 10 May 2018 ORS advised her in writing of their offer to transfer her employment from ORS to a different employer Advanced Personnel Management (APM) with effect from 18 June 2018. The offer advised her that APM had agreed to offer her a suitable alternative role based on her current role type, duties and responsibilities and with a full-time equivalent salary.

[10] The offer advised that as part of the transfer APM would honour her length of service and the annual, personal and long service leave that she had accrued with ORS.

[11] Ms Zhang was asked to consider the offer of the transfer to APM that ORS had obtained for her. ORS advised that once she accepted the transfer ORS would provide the relevant information to APM in order for APM to create her detailed employment contract.

[12] Ms Zhang was asked to complete a form either accepting or rejecting the transfer of her employment from ORS to APM.

[13] On 14 May 2018 Ms Zhang advised ORS that she objected to the transfer of her employment to APM.

[14] Ms Zhang responded by letter dated 14 May 2018 addressed to Ms Brittany Nguyen (Ms Nguyen), the HR Manager of ORS. In her letter Ms Zhang complains that the role that APM is not suitable because it is not comparable. In Ms Zhang's words,

"The Offer misses out entirely any affirmation of key employment terms such as location of work, environment of work including corporate culture, transition planning and training, report and support structure in relation to the new role as well as job security moving forward."

[15] Ms Zhang continued on to express her view that there had been negative feedback from both colleagues and clients regarding their experiences at APM.

[16] Four days later on 18 May 2018 Ms Nguyen advised Ms Zhang by email that if she accepted the offer of transfer she would have received a formal contract from APM and she would then have had the opportunity to accept or decline the employment with APM. Her email continued as follows,

"If you are open to receiving a contract from APM to review please let me know and I am happy to arrange this.

It is my understanding that in addition to the above you have been also offered the following position however have chosen to decline.

As you would also be aware, there is currently still a vacant Employment Consultant role in Hurstville however at this stage we have not received an application from yourself. If you would like to be reconsidered for this role please let me know."

"If you confirm that you do not wish to receive an employment contract from APM or accept or apply for the Employment Consultant role at Hurstville, The ORS Group will be applying to Fair Work regarding redundancy entitlement reductions based on the above suitable employment being provided."

[18] On 21 May 2018 Ms Zhang replied to Ms Nguyen being highly critical of the process. Ms Zhang went on to say that she was "...willing to review the APM Offer of Employment (Terms and conditions of employment), however please ensure you provide a copy to me by no later than COB 22 May 2018."

[19] Ms Zhang then restated her concerns about the terms and conditions of employment at APM as outlined in previous emails of Mr Peter Scott of ORS.

[20] She continues on to say that she will not be applying for the available Employment Consultant role in Hurstville because the advertised role involves managing a different government contract, ESS, of which she has little knowledge. She says for the last two years she has only been managing DMS and CALD contracts which ORS has now lost.

[21] Her email denied that she had been offered an Employment Consultant position at ORS in March 2018.

[22] The Respondent however has provided a witness statement from Ms Erin Edwards (Ms Edwards) of ORS dated 15 June 2018 stating that she verbally offered Ms Zhang the position of Employment Consultant ESS, full-time with a salary of $60,180 per annum located at Hurstville and that Ms Zhang declined this offer of employment verbally on 14 March 2018.

[23] On 22 May 2018 Ms Nguyen forwarded to Ms Zhang a draft APM Letter of Offer and standard APM Employment Terms and Conditions. She went on to advise Ms Zhang that she had confirmed the APM role will be working both with DMS and ESS contracts and will be located at the current ORS location in Hurstville.

[24] She advised that the following employment terms have been agreed upon for all employees accepting a role with APM,

• Base salary of $60,180 per annum.

• All leave balances with ORS will carry over to APM upon commencement including annual, personal and long service leave.

• Ms Zhang's service with ORS will be recognised by APM in all aspects including the accrual of long service leave.

• There will be no probationary period.

[25] On 23 May 2018 at 8.28 a.m. Ms Zhang replied to Ms Nguyen thanking her for providing the detail regarding the APM offer and employment terms and conditions.

[26] Ultimately she advised that it was clear to her that the APM role is not comparable. She advised she would not be accepting the transfer to APM. She also confirmed she would not be applying for the ORS Employment Consultant Hurstville position.

[27] Sections 119 and 120 of the Act are relevant for the purposes of this decision and are set out below.

(1) An employee is entitled to be paid redundancy pay by the employer if the employee's employment is terminated:

(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.

(2) The amount of the redundancy pay equals the total amount payable to the employee for the redundancy pay period worked out using the following table at the employee's base rate of pay for his or her ordinary hours of work:

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

(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."

[28] Considering these facts above the issue to be determined by the Commission is whether ORS obtained "other acceptable employment" for Ms Zhang. Only if it has obtained other acceptable employment must the Commission then consider whether to exercise its discretion to reduce the amount of redundancy pay payable and if so by what amount.

[29] As noted by the Full Bench in Australian Chamber of Manufacturers v Derole Nominees Pty Ltd[1] at 124:

"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 provisions 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 elections 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."

[30] As was explained by Watson SDP in Feltex Australia Pty Ltd v Textile, Clothing and Footwear Union of Australia[2] at [89]:

"...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."

[31] In Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd[3] a Full Bench of the Commission found that the determination of whether alternative employment is acceptable will involve a consideration of such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and other matters including the location of the employment and travelling time.

[32] In National Union of Workers v Linfox Australia Pty Ltd[4] Watson VP considered the following criteria to be relevant when determining whether alternative employment is acceptable:

(a) the employee's skills, experience and physical capacity;

(b) the rates of pay, hours of work, duties and conditions of employment associated with the proposed job;

(c) whether or not continuity of employment is provided to the employee;

(d) the extent of any additional travel distances from home to the new place of work and whether the employee has to substantially alter their method of travelling to and from work in order to attend to duty; and

[33] In my view the term "acceptable alternative employment" considered in this case law should be taken to have the same meaning as the term "other acceptable employment" which is used in section 120 of the Act and hence the case law is directly applicable in this matter.

[34] In this case ORS submit that Ms Zhang was offered two roles each of which were other acceptable employment.

[35] I note there is a disagreement between the witness statement of Ms Edwards and what Ms Zhang has said as to whether or not she was ever offered the role of Employment Consultant ESS with ORS by Ms Edwards on 14 March 2018. If it was the case that this Employment Consultant ESS position was offered to Ms Zhang then clearly this would have been other acceptable employment obtained for her by ORS. However because of what follows it is not necessary for me to resolve this conflict in the information provided to the Commission.

[36] Turning to consider the offer to Ms Zhang for her to take up employment with APM. Firstly I am satisfied that ORS had obtained for Ms Zhang this other employment.

[37] The other employment at APM was a similar role to Ms Zhang's previous position with ORS. She would continue to be employed as an Employment Consultant however her client caseload rather than being only DMS (Disability Management Services) would be both DMS and ESS (Employment Support Services). The location where she would work was the same. The annual salary she would be paid was the same. Both positions were full-time. There would be no loss of leave accruals, these would be carried over to APM and honoured by her new employer. Her length of service with ORS was to be honoured by APM.

[38] Ms Zhang in her submission identified a number of differences between ORS and APM. I accept there will certainly be some differences between the two employers operations and there will be some differences between the two roles and some employment entitlements.

[39] The question for the Commission however is to consider objectively whether the position obtained for her at APM was other acceptable employment. The fact that Ms Zhang's redundant position and the other employment obtained for her at APM are not identical does not prevent the other employment from being other acceptable employment.

[40] In the circumstances of this case I accept there were some differences between Ms Zhang's former position and the other employment ORS had obtained for her. I also accept some of these differences would have involved some detriment to her however this was relatively limited.

[41] Consequently I am satisfied that the other employment ORS had obtained for Ms Zhang at APM was other acceptable employment.

[42] Considering the particular circumstances here I agree it is appropriate to reduce the redundancy pay to which Ms Zhang would have otherwise been entitled to nil.

[43] An order [PR609980] to that effect will now be issued.

[1] [1990] AIRC 980; (1990) 140 IR 123.

[3] (1988) 27 IR 226.

[4] [2008] AIRC 647.

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