[2014] FWCFB 6737

[2014] FWCFB 6737 [Note: refer to the Federal Court decision dated 26 June 2015 [2015] FCAFC 90 for result of appeal.]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.604 - Appeal of decisions

Maritime Union of Australia, The
v
FBIS International Protective Services (Aust) Pty Ltd
(C2014/4854)

SENIOR DEPUTY PRESIDENT WATSON
DEPUTY PRESIDENT GOSTENCNIK
COMMISSIONER CRIBB

MELBOURNE, 21 OCTOBER 2014

Appeal against decision [[2014] FWC 1922] and orders [PR550814 and PR550817] of Commissioner Gregory at Melbourne on 20 May 2014 in matter number C2013/7271 – permission to appeal granted, appeal upheld decision and orders quashed – jurisdictional basis for making of orders under s.120 of the Act within s.120(1)(b)(i) has not been established – application for order under s.120 of the Act dismissed – decision and orders quashed.

[1] This is an appeal by The Maritime Union of Australia (the Appellant) made under s.604 of the Fair Work Act 2009 (the Act) against a decision 1 and orders2 of Commissioner Gregory. The decision and orders were made consequent to an application under s.120 of the Act by FBIS International Protective Services (Aust) Pty Ltd (the Respondent) to reduce the redundancy payments to which employees would have otherwise been entitled under s.119 of the Act. One order3 reduced the amount of redundancy pay in respect of 48 employees to nil. The second order4 reduced the amount of redundancy pay in respect of a further employee, Ms D Pickering, to 50 per cent of that which the employee would have otherwise been entitled under s.119.

Sections 119 and 120 of the Act

[2] Sections 119 and 120 of the Act form part of the National Employment Standards (NES) and prescribe minimum standards in respect of Notice of termination and redundancy pay in Division 11 of Part 2–2 of the Act. Section 119 sets out the amount of redundancy pay to which an employee is entitled, subject to variation under s.121, exclusions in s.120, the effect of transfer of employment situations in s.122 and limits on the scope of Division 11 of Part 2–2 of the Act.

[3] Section 120 provides for variation of the amount of redundancy pay an employee is entitled to be paid because of s.119 and is in the following terms:

“(1) This section applies if:

(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.”

[4] The application before Commissioner Gregory was brought and the orders made by him on the basis that the employees affected by the orders were entitled to be paid an amount of redundancy pay by the employer because of s.119 (s.120(1)(a)) and on the basis that the employer obtained other acceptable employment for the employees (s.120(1)(b)(i)).

Background to the Respondent’s application under s.120 of the Act

[5] Until 31 October 2013, the Respondent held the contract with Asciano Executive Services Pty Ltd (Asciano) for the provision of security services in several locations within Australia, principally at stevedoring facilities. It was unsuccessful in its tender to secure a further contract beyond that time. A different contractor, ACG National Pty Ltd (ACG) was successful in securing the contract, effective from 1 November 2013.

[6] Each of the employees who were subject to the order reducing their redundancy pay to nil were offered and accepted employment with ACG in the same position, and on the same terms and conditions but without recognition of their service with the Respondent. Ms Pickering, who was subject to the order reducing her redundancy pay to 50 per cent of her entitlement under s.119 was offered and accepted employment with ACG in a lesser position, and without recognition of her service with the Respondent.

[7] The Respondent’s application under s.120 of the Act was made on the basis that it had obtained other acceptable employment for each of the employees who were offered and had accepted employment with ACG.

Appeal Grounds

[8] The Appellant’s notice of appeal raised three appeal grounds:

“1. The Commissioner erred in finding that the Respondent obtained alternative employment for the employees.

2. The Commissioner erred in finding that the relevant employment was acceptable alternative employment.

3. The Commissioner erred in determining that the employees’ redundancy pay should be reduced to nil.”

[9] At the commencement of the appeal hearing, the Appellant sought and was granted permission to amend its notice of appeal by adding two additional grounds of appeal:

“4. The Commissioner erred by failing to consider and make a finding as to whether the employees respondents were ‘entitled to be paid an amount of redundancy pay by the employer because of s.119’, as required by s.120(1)(a) of the Fair Work Act 2009.

5. The Commissioner erred in determining s.120 of the Fair Work Act 2009 empowered the making of the orders.”

[10] The Appellant’s notice of appeal advanced three matters which it contended made it in the public interest to grant permission to appeal:

“1. The employees have suffered an injustice by having their redundancy entitlements reduced to nil;

2. The decision is affected by sufficient error to warrant appellate intervention.

3. The appeal raises issues about the proper test to be applied under s.120 of the Act.”

[11] Grounds 1 and 2, as advanced by the Appellant in its notice of appeal raised findings of fact in respect of whether the Respondent obtained the employment of each employee with ACG and whether the employment was acceptable employment, each of which is a jurisdictional pre-requisite to the making of an order under s.120 of the Act. Each of the grounds attacks a discretionary decision going to the establishment of a jurisdictional fact.

[12] The third appeal ground in the notice of appeal, concerned the extent of reduction in the entitlement going to an alleged error in the exercise of the discretion within s.120 of the Act, in the event that the jurisdictional prerequisite is established.

[13] The additional appeal grounds (4 and 5) introduced through the amendment of the notice of appeal raise questions of the construction of the Act in relation to the entitlement of the relevant employees to be paid an amount of redundancy pay by the employer because of s.119, having regard to the operation of the FBIS International Protective Services (Aust) Collective Agreement 2012 - 2016 5 (the FBIS Agreement) which covered and applied to the relevant employees when employed by the Respondent and the effect of ss.55(5) and (6) of the Act.

The standing of the Appellant to bring the appeal

[14] Whilst the Appellant was not a party to the proceedings before Commissioner Gregory, it contended that it is a “person aggrieved” by the decision and orders because all of the employees affected by the orders are eligible to be members or are members and have asked the Appellant to bring on the appeal. An unchallenged witness statement of the National Legal Officer of the Appellant states that eight persons named in the orders are members and a number of them asked for the assistance of the MUA to appeal the decision. The Respondent does not challenge the Appellant’s standing to bring the appeal. 6

[15] We are satisfied that the Appellant is a person aggrieved by the decision and orders the subject of this appeal and is entitled to bring on the appeal.

Application by United Voice to put submissions in the appeal

[16] United Voice was not a party to the proceedings before Commissioner Gregory but applied under ss.589 and 590 in the appeal as a person able to establish a relevant interest in the matters raised by the appeal grounds. 7 United Voice asserted that it had such an interest in that two of the employees named in the orders of the Commissioner were members and it had an interest on behalf of its membership more broadly in the issues raised in the appeal – redundancy payments in circumstances of a change in contract. The Appellant supported the application by United Voice. The Respondent opposed the application but chose not to challenge the assertions in relation to members affected by the orders. We allowed United Voice to make submissions, restricted to those raised by the appeal grounds (including the additional grounds in the Appellant’s amended notice) on the basis of the relevant interest established through its affected members.

Background to the hearing before Commissioner Gregory

[17] The Respondent’s application before the Commissioner was opposed by some affected employees on their own behalf and behalf of other employees. Some employees provided written submissions and statements of evidence but none appeared in the proceedings before the Commissioner or gave evidence. The Respondent relied on evidence of Mr J Christmas, the Respondent’s National Operations Manager which was accepted without cross-examination or challenge. It follows that the evidence before the Commissioner was limited to that of Mr Christmas. The appeal is necessarily directed to the establishment of error on the basis of the evidence before Commissioner Gregory.

Consideration

Entitlement of the relevant employees to be paid an amount of redundancy pay by the employer because of s.119

[18] The amended grounds of appeal (grounds 4 and 5) raise for consideration whether the employees affected by the orders made by the Commissioner had an entitlement to redundancy pay because of s.119 of the Act. The Appellant argued that the Commissioner fell into error because he failed to consider whether these employees had such an entitlement.

[19] The Appellant, supported by United Voice, maintained that the Commissioner should have concluded that the relevant employees did not have an entitlement to redundancy pay because of s.119 and consequently the Commissioner did not have power to make any order varying redundancy entitlements under s.120 of the Act.

[20] It is clear that the power to reduce an amount of redundancy pay under the NES is only enlivened if, relevantly “an employee is entitled to be paid an amount of redundancy pay by the employer because of section 119”. 8

[21] The Appellant submitted that the entitlement to redundancy pay of the relevant employees arises under clause 2.5 of the FBIS Agreement and not s.119 of the Act. It says that by reason of ss.55(4), (5) and (6), the NES operates as a minimum standard but not the source of entitlement to redundancy pay in the relevant sense. In consequence, so was submitted, s.120 is excluded by the express terms of the FBIS Agreement. As s.120 is only enlivened if an entitlement arises “because of” s.119, there is no displacement of the minimum standards of the NES contrary to s.61 of the Act.

[22] We are not persuaded that this construction is correct.

[23] Section 55(4) of the Act permits an enterprise agreement to include terms that are “ancillary or incidental to the operation of an entitlement of an employee under the” NES or “that supplement the” NES. Terms that are ancillary or incidental to, or that supplement, the NES must not be detrimental to an employee in any respect when compared to the NES. Section 55(5) permits an enterprise agreement to include terms that have the same or substantially the same effect as provisions of the NES whether or not such terms are ancillary or supplementary terms.

[24] Section 55(6) of the Act relevantly provides that if an enterprise agreement includes terms permitted by ss.55(4) or (5) then if such terms give an employee an entitlement that is the same as an entitlement under the NES, the enterprise agreement terms operate in parallel with the employee’s NES entitlement, but not so as to give the employee a double benefit, and the provisions of the NES “relating to the NES entitlement apply, as a minimum standard” to the enterprise agreement entitlement.

[25] Clause 2.5.2.1 of the FBIS Agreement 9 contains a term that gives an employee an entitlement to redundancy pay that is the same as the NES entitlement, although it is not clear whether the precondition that an employee “is made redundant by the Company” under the FBIS Agreement has the same meaning as the preconditions to the entitlement in s.119(1) of the Act. Nonetheless to the extent that the FBIS Agreement provides the same entitlement to redundancy pay as the NES entitlement, the entitlement to redundancy pay may be sourced both in the FBIS Agreement and in the NES because they “operate in parallel”. The entitlement may be enforced under either source but not both sources so as not “to give a double benefit”. This is the effect of s.55(6). This construction is clear in the words of s.55(6) but lest there be doubt, the construction is also consistent with the explanation of the provision in the Supplementary Explanatory Memorandum to the Fair Work Bill 2008, which provides:

“24. The amendments make clear that an enterprise agreement can include terms that are the same (or substantially the same) as an NES entitlement. These could be terms which simply replicate the NES or terms that make ancillary or supplementary provision in relation to the NES and subsume the NES entitlement. This means that an employer can make a comprehensive enterprise agreement with the employer’s employees.

25. Such terms operate in parallel with the NES entitlement, and do not confer a double entitlement. The same applies to terms of modern awards that are ancillary or supplementary to a NES entitlement. This means that a NES entitlement can be sourced both in the NES and in an enterprise agreement or modern award and can be enforced as an entitlement under either. Also, the mechanisms contained in the agreement are available to resolve any dispute about the entitlement.” 10 [Our emphasis added]

[26] However the entitlement to redundancy pay under the FBIS Agreement does not operate writ large. Whilst it is possible for an enterprise agreement to provide for a term which requires a redundancy entitlement to be paid unencumbered by s.120 of the Act, the FBIS Agreement does not so provide. Clause 2.5.5 of the FBIS Agreement contains exclusions, clause 2.5.5.1(c) of which provides that the redundancy clause shall not apply:

“. . . in a particular redundancy case if the Company arranges suitable alternative employment for the Employee; or the Employee unreasonably refuses to accept such employment”

[27] It is immediately apparent that the effect of this exclusion is that redundancy entitlements under the FBIS Agreement are not payable at all in the circumstances contemplated by the exclusion. For present purposes it is not necessary to decide whether there is any material difference between the phrase “obtains other acceptable employment” in s.120 of the Act and “arranges suitable alternative employment” in clause 2.5.5.1(c). Under clause 2.5.5, unlike s.120, there is no requirement for an application to be made to the Commission before the exclusions may be invoked and there is no possibility in the circumstances contemplated by the exclusions for a reduction of the entitlement rather than a complete loss of the entitlement. It cannot therefore be said that the clause is ancillary or incidental to, or supplements the NES within the meaning of s.55(4) of the Act because to the extent identified above, it is detrimental to an employee. Nor can it be said that the exclusions term in clause 2.5.5 has the same or substantially the same effect as any provision of the NES. Even if it were such a term it cannot displace s.120 by reason of s.61(1) of the Act.

[28] Moreover, to the extent that it was submitted that s.120 was excluded by operation of clause 2.5 of the FBIS Agreement, the submissions, in the circumstances of the exclusions in clause 2.5.5, flies in the face of s.55(1) and if it so operated it has no effect by reason of s.56 of the Act.

[29] To the extent that the redundancy pay entitlement in clause 2.5.2 provides an entitlement that is the same as the NES entitlement in s.119 within the meaning of s.55(5) then as s.55(6)(b) makes clear the provisions of the NES relating to the NES entitlement apply as a minimum standard to the enterprise agreement entitlement that is the same as the NES entitlement.

[30] It seems clear to us that s.120 of the Act is a provision of the NES relating to the NES redundancy pay entitlement in s.119. For reasons already given, it is not as suggested by the Appellant, excluded by the express terms of the FBIS Agreement. Rather it continues to apply as a minimum standard to the redundancy pay entitlement under the FBIS Agreement that is the same as the NES entitlement. In our view, this construction is consistent with the statutory note found at the end of s.55(6) of the Act which provides:

“Note: For example, if the award or agreement entitlement is to 6 weeks of paid annual leave per year, the provisions of the National Employment Standards relating to the accrual and taking of paid annual leave will apply, as a minimum standard, to 4 weeks of that leave.”

[31] It is also consistent with the explanation of this provision in the Supplementary Explanatory Memorandum to the Fair Work Bill 2008, which provides:

“28. The amendments made by this item also make clear that where:

an enterprise agreement contains terms that are the same or substantially the same as a NES entitlement, or terms that are ancillary or incidental to, or which supplement, a NES entitlement; or
a modern award contains terms that are ancillary or incidental to, or which supplement, a NES entitlement,

the provisions in the NES that relate to that entitlement (e.g., in relation to rate of accrual of leave, or what notice must be given to access an entitlement) apply to the entitlement in the award or agreement (as a minimum standard) to the extent that the award or agreement entitlement is the same as the NES guaranteed entitlement

[32] The construction we prefer also gives full effect to s.61 of the Act. The construction argued for by the Appellant would displace the NES redundancy entitlement in s.119 and the NES standard relating to that entitlement found in s.120. The NES entitlement would not operate in parallel with the enterprise agreement entitlement, while the NES standard related to the NES entitlement it would not apply as a minimum standard to the enterprise agreement entitlement, and the exclusion of the entitlement would be subject to a less stringent test. As we have indicated above, an enterprise agreement may expressly or by necessary implication allow the NES redundancy entitlement to operate without the strictures in s.120 of the Act. That is, it might allow an employee an entitlement even if an employer obtained acceptable alternative employment for the employee. This would be a term that fell within s.55(4) of the Act. Clause 2.5.5.1(c) is not a term that has that effect, to the contrary it is detrimental to the employee.

[33] It follows that the Commissioner had power to reduce the amount of redundancy pay under s.120 of the Act that would otherwise have been payable to the employees under s.119 of the Act as the employees were entitled to be paid an amount of redundancy pay because of that section. No appellable error has therefore been disclosed.

“Obtained”

The decision of Commissioner Gregory

[34] Commissioner Gregory noted 12 actions taken by Mr Christmas to obtain acceptable employment with ACG for the relevant employees:

A series of discussions with ACG representatives about employees’ future engagement by ACG;
Provision to ACG of details about those “employees who agreed to allow FBIS to pass on their contact details”;
Provision to ACG of information about the arrangements within the FBIS Agreement; and
Provision of advice to ACG that FBIS paid the employees “their wages up to and including 31 October 2013 . . . together with all accrued leave entitlements”.

[35] The Commissioner was satisfied that the Respondent had obtained employment for the relevant employees with ACG. 13 In coming to this conclusion,14 the Commissioner:

noted the submissions and evidence of Mr G Crampton “that the employees themselves did most of the work to obtain employment with the new contractor”, were interviewed before being engaged and their employment was subject to a probationary period;
stated that the evidence of Mr Christmas indicates “there was a significant degree of contact, and in some cases negotiation, with the new contractor about engaging the employees, and on what terms”.

[36] The Commissioner considered the Full Bench decision in The Australian Chamber of Manufacturers v Derole Nominees Pty Ltd 15 (Derole Nominees), stating that it indicated that “obtain” cannot mean obtain “‘in the fullest sense possible’ because one employer is incapable of effecting a contract of employment with its employees and another employer, and the word must be given ‘some lesser meaning’”.

[37] Commissioner Gregory was satisfied that “the evidence of Mr Christmas, in particular, indicates FBIS has done enough in all the circumstances to ‘obtain’ alternative employment for the employees”. 16

Submissions

[38] The Appellant submitted that the conclusion by Commissioner Gregory that the Respondent had obtained employment for each of the relevant employees with ACG was unreasonable having regard to the evidence of Mr Christmas and reflected error on the Commissioner’s part. The Appellant submitted that there was no evidence that the Respondent had secured an agreement or commitment from ACG that it would make offers of employment to the relevant employees or the terms on which such an offer would be made. The Appellant submitted that notwithstanding an obligation upon it to facilitate a meeting between the incoming contractor and the outgoing employees, 17 Mr Christmas’ evidence was that “he was unaware of any ‘arrangement for meetings between ACG and FBIS employees during which offers of employment might be made’” and sought to prevent such meetings unless facilitated through him.

[39] The Appellant submitted that, at the date of the conclusion of its contract, the Respondent was unaware if any offers of employment had been made by ACG to any of the relevant employees, with the Respondent asking the employees to advise if they had been offered employment with ACG.

[40] The Respondent submitted that no error is evident in the finding of Commissioner Gregory that it had obtained employment for employees with ACG. It submitted that the Commissioner considered and appropriately applied the approach in Derole Nominees and Datacom Systems Vic Pty Ltd v Khan and Another 18 (Datacom) and was correct to find that “a significant degree of contact, and in some cases negotiation, with the new contractor about engaging the employees, and on what terms”.19

[41] The Respondent submitted that the Commissioner’s conclusion was supported by the evidence of Mr Christmas that the Respondent met with ACG to discuss transition to the new contract, wrote to the relevant employees seeking permission to pass contact details to ACG and passed on that information where authorised and sought to negotiate recognition by ACG of accrued entitlements and past serve with the Respondent.

Conclusion in relation to “obtained”

[42] The question of what is required by the word “obtains” was considered by the Full Bench in Derole Nominees. It found:

“The word ‘obtains’ does not appear in its context to mean actually obtain in the fullest sense possible. In circumstances like those occurring at the company one employer is incapable in law of effecting a contract of employment between his employee and another employer whether by assignment or otherwise; the creation of the legal relationship of master and servant depends on a mutuality being arrived at between the individual and the incoming employer. Therefore, the pursuit of alternative employment by the outgoing employer cannot be expected, by reason of itself alone, to produce new employment; there will usually and perhaps always remain the opportunity for the incoming employer, and the employee, to disagree as to matters such as terms of employment, suitability of the job to the employee and vice versa so that alternative employment may not eventuate.

It follows that ‘obtain’ must be given some lesser meaning. The Shorter Oxford Dictionary (3rd ed revised) provides as its relevant meaning, the definition of ‘obtain’ as ‘to procure or gain, as the result of purpose and effort’. It seems to us that meaning is of assistance here; that is, the employer by purpose and effort may establish an opportunity which suits the employee and which crystallises as alternative employment of an acceptable kind.” 20 [citations removed]

and

“Viewed in this way it will be seen that the intention is not to impose an absolute test on the employer’s ability to ‘obtain’ alternative employment but rather it refers to action which causes acceptable alternative employment to become available to the redundant employee. The employer must be a strong, moving force towards the creation of the available opportunity.” 21

[43] In Datacom Vice President Lawler also expressed the view that the word “obtains” in the context of s.120 should be given a very broad interpretation. 22

[44] In Allman v Teletech International Pty Ltd, 23 Marshall J considered whether Teletech International Pty Ltd (Teletech) had been “able to arrange alternative employment” which appeared in provisions for relief from the obligation to pay redundancy payments within relevant workplace agreement, upon its employees being offered employment by Telstra upon taking over a contract formally held by Teletech. His Honour considered the Full Bench decision in Derole Nominees, finding that “[t]here is no material difference between obtaining alternative employment and being able to arrange it.” 24

[45] Justice Marshall found that Teletech assisted its employees to apply for jobs with Telstra, had active involvement in the transition of the employees to work with Telstra, met with Telstra to discuss the possible employment of the employees by Telstra and secured a commitment from Telstra that Telstra would give all redundant Teletech employees the opportunity to apply for employment with Telstra. He found:

“Teletech was not, however, a strong moving force towards the creation of the available opportunity. The available opportunity arose because Telstra was to perform functions formerly performed for it by Teletech. Telstra required staff. It made sense for it to approach Teletech staff. Teletech did not secure the offer of a job for Teletech staff with Telstra. As counsel for the applicants submitted, Teletech arranged an opportunity for the employee applicants to participate in a recruitment process undertaken by Telstra.” 25

[46] Whilst accepting that Teletech brought the employees and Telstra together and that Teletech’s conduct was one of the factors that brought about the employment, Justice Marshall found that it did not mean that Teletech was able to arrange the employment, finding that Teletech facilitated its staff applying for jobs with Telstra, competing on their merits for the available positions. 26 His Honour found that:

“The encouragement and facilitation of a process is not the same as doing everything possible to ensure a result. Arranging alternative employment means bringing about that employment should the employee choose to accept it. Anything short of that, such as competing with competitor applicants (albeit limited to two categories of applicant: existing Telstra and Teletech employees) does not meet the test provided by the relevant sub-clause in the AWAs.” 27

[47] Mr Christmas’ evidence 28 was as follows:

On 23 September 2013, after the Respondent had tendered to provide continued security services to Asciano, Asciano Group Commercial Risk Manger, Mr S Kelson telephoned him, advising him that it was likely that the Respondent had lost the contract, with a likely transition date of 31 October 2013 but recommending that he not inform anyone of the decision at that point;
On 25 September 2013, Mr Christmas received a courtesy copy of an email from the Mr Kelson to Mr B Tresider, General Manager of Special Projects, asking Mr Tresider to engage Mr Christmas on transitional matters;
On 3 October 2013, Mr Christmas met with Mr Tresider:

Mr Christmas provided him with a copy of the FBIS Agreement (which Mr Tresider said he had already obtained from the Fair Work Commission’s (the Commission) web-site), the terms and conditions of which Mr Christmas and Mr Tresider discussed;
Mr Tresider advised that ACG had made a decision to accept all leave liabilities and accruals for FBIS employees it offered employment to; and
Mr Christmas and Mr Tresider agreed that a transfer date of 31 October 2013 would make it difficult for the Respondent to comply with the requirements of the FBIS Agreement and Mr Tresider would apply to Asciano to extend the date by at least one month.

On 8 October 2013, Mr Christmas received an email stating that the Respondent had lost the tender and the transmission of business would occur on 31 October 2013.
On 8 October 2013, the Respondent wrote to affected employees, explaining the requirements of the Respondent in accordance with the FBIS Agreement and seeking permission to provide the employees’ contact details to ACG.
On 9 October 2013, Mr Christmas emailed a list of all employees who had given permission to do so to Mr J Knott, the ACG Transition Manager in order to allow ACG to contact the employees to make offers of employment. He also asked Mr Knott to contact him in relation to arrangements for ACG to meet the Respondent’s employees because he was aware ACG had been attending on-site. Mr Christmas continued to send employee details to ACG when permission was given by employees over the following weeks. No response was received from Mr Knott to the 9 October 2013 email.
On 10 October 2013, Mr Christmas emailed Mr Tresider requesting a meeting in relation to transfer of leave liabilities. Mr Tresider responded saying that the only person who could make those decisions was the ACG Chief Executive Officer, Mr P Kyriopolous who was away at that time.
On or about 14 October 2013, Mr Tresider telephoned Mr Christmas, stating that ACG would not accept annual leave accruals but would consider length of service and long service accruals.
On 15 October 2013, Mr Christmas rang Mr Kyriopolous in relation to acceptance by ACG of the liabilities. Mr Kyriopolous stated that ACG would not accept any liabilities without compensation from the Respondent and requested a list of all employees and their accruals.
On 21 October 2013, Mr Christmas emailed Mr Knott, providing an updated list of employees with contact details and stating that the Respondent could not provide the information concerning accruals requested unless employees had been offered employment by ACG and requested a list of employees who had been offered employment so he could forward the accrual details.
On 23 October 2013, Mr Christmas emailed Mr Knott requesting information on which employees had been offered positions. No response was received.
On 25 October 2013, four employees contacted Mr Christmas saying that they had been interviewed by ACG but had been unsuccessful in obtaining positions.
On 28 October 2013, Mr Christmas emailed Mr Kyriopolous a proposal concerning compensation to ACG in respect of leave accruals.
On 29 October 2013, Mr Christmas spoke with Mr Tresider in relation to his proposal. Mr Tresider advised that he was no longer involved in the transition process. Later that day Mr Kyriopolous emailed Mr Christmas stating that ACG had decided not to accept any liabilities or recognise service with the Respondent.
On 30 October 2013, Mr Christmas emailed Mr Knott requesting information in relation to any offers of employment made to the Respondent’s employees by ACG. No response was received.
On 30 October 2013, Mr Christmas received a copy of a letter of employment from ACG to an employee of the Respondent. On 31 October 2013, Mr Christmas sent an email to Mr Knott requesting information about any offers of employment by ACG to the Respondent’s employees. On 1 November 2013, another ACG Manager responded, declining to provide such information as they had not received permission from the employees to do so.
Also on 31 October 2013, the Respondent contacted all employees affected by the loss of the Asciano contract confirming that their employment with the Respondent ceased on that day and asking them, as a matter of priority, to advise if they had been offered employment with ACG and to provide a copy of the letter of offer.

[48] Mr Christmas’ witness statement discloses that the action taken by the Respondent to obtain employment with ACG for its soon to be redundant employees was to provide a list of employees and their contact details to ACG in respect of those employees who gave permission to do so, with the two main communications in evidence of employee details occurring on 9 October 2013 in respect of 32 of the employees subject to the orders made and 21 October 2013 in respect of an additional 15 employees subject to the orders made. Two employees subject to the orders – Mr S Clancy and Mr N Giffen – were not identified in either of the emails.

[49] The provision of the lists of employees did not obtain employment with ACG for employees, rather it simply facilitated an invitation by ACG to the Respondent’s employees to apply for a position and undertake an interview. That action by the Respondent did not have the impact of securing employment for the employees, as is evident from the 25 October 2013 advice to Mr Christmas by four employees that they had been interviewed by ACG but had been unsuccessful in obtaining positions. 29 The action by the Respondent to facilitate contact between its employees and ACG did no more than to secure the employees an opportunity to enter the recruitment process of ACG which may or may not have resulted in an offer of employment. The evidence of Mr Christmas concerning the four employees was consistent with the written submissions to Commissioner Gregory by Brisbane based employees:

“. . . the applicant did not obtain acceptable employment on our behalf. To obtain employment with the new provider we were all required to submit applications and attend interviews. These interviews were not facilitated by FBIS and at any time the new provider could have replaced all staff with other staff of their own.” 30

[50] The limited role of the Respondent in the employment of the employees by ACG is confirmed by Mr Christmas’ evidence of approaches by the Respondent to ACG on 23, 30 and 31 October 2013 in which it sought information from ACG as to which employees had been offered employment and, when ACG declined to provide it, the Respondent’s 31 October 2013 request to employees asking them, as a matter of priority, to advise if they had been offered employment with ACG and to provide a copy of the letter of offer. It is plain on this evidence that the Respondent had no knowledge of which employees had been offered employment by ACG or of the terms and conditions of employment contained in any offer. There was no basis to suggest, in these circumstances, that the Respondent had “obtained” employment for its employees. At the time the employment with the Respondent came to an end, the Respondent was unaware as to whether their employees had obtained employment with ACG and, if so, on what terms. 31 The Respondent’s action in providing contact details of employees to ACG did no more than facilitate contact in order that the employees could engage in the recruitment process undertaken by ACG.

[51] A further action undertaken by the Respondent, reflected in the evidence of Mr Christmas, was to request that ACG make arrangements for ACG to meet the Respondent’s employees through the Respondent, in order that the Respondent could manage its obligations under the FBIS Agreement, a request not acceded to by ACG, which made its own arrangements to contact employees and offer (or decline to offer) employment to the employees. Whilst the Respondent sought to play a role in arranging contact between ACG and its employees, it in fact played no role other than the provision of contact details to ACG.

[52] The only other additional actions taken by the Respondent, as reflected in the evidence of Mr Christmas were:

its unsuccessful attempt to engage ACG in discussions directed to a commercial agreement between the two companies in relation to the employees’ accrued leave and accrued service with the Respondent, on the basis of its view that “[f]or an offer from ACG to constitute acceptable alternative employment, the employee’s continuity of service needs to be recognised by ACG, including all leave liabilities”; 32 and
its provision to ACG of a copy of the FBIS Agreement which ACG had already obtained from the Commission’s web-site.

[53] Each action was directed to ACG offering employment which met the requirement of “acceptable employment” for the purposes of s.120 of the Act and did not constitute action to obtain the employment, acceptable or otherwise.

[54] In our view, the limited actions of the Respondent, which did no more than establish contact between its employees and ACG, with the effect that employees were able to participate in the recruitment processes of ACG falls well short of action which “causes acceptable alternative employment to become available to the redundant employee” and the Respondent was not a “strong, moving force towards the creation of the available opportunity”.

[55] The finding of Commissioner Gregory that “the evidence of Mr Christmas, in particular, indicates FBIS has done enough in all the circumstances to “obtain” alternative employment for the employees” 33 was incorrect and was not open on the evidence given the limited actions of the Respondent which did no more than facilitate the entry of its employees into the recruitment processes of ACG. In our view, as the conclusion was not available to the Commissioner on the evidence it reflects a significant error of fact.

[56] For that reason, we grant the appellant permission to appeal. Further, we uphold the appeal and quash the decision and orders of Commissioner Gregory.

[57] On a rehearing, for the reasons given above, we find, that the Respondent did not obtain employment with ACG and, as a result the jurisdictional basis for the making of an order under s.120 of the Act within s.120(1)(b)(i) has not been established.

[58] In light of this conclusion, it is not necessary to determine the matters raised in the remaining appeal grounds concerning “acceptable employment” or the reduction made in the redundancy entitlements by the Commissioner. However, as the matters were fully argued before us we will briefly address those remaining grounds of appeal.

“Acceptable employment”

[59] Commissioner Gregory noted that the tests to be applied in determining what is “acceptable alternative employment” are to be applied objectively. 34 He noted that the decision in Derole Nominees indicated that the work being of a like nature, the location, pay arrangements, hours of work, seniority, fringe benefits, workload and job security are all relevant considerations in this context and found that there was no requirement that the new employment be identical, or broadly comparable.35 Relying on authorities cited by him, the Commissioner found that “the existence of some detrimental alteration to employment conditions does not mean that acceptable alternative employment has not been obtained”.36

[60] The Commissioner gave consideration to the loss of non-transferable credits in respect of accrued service, such as personal or long service leave entitlements, accepting it to be a factor to be taken into account in determining whether that employer had obtained adequate acceptable employment for the employees. 37 The Commissioner concluded that the weight of evidence was that there had been little or no change between what existed when the employees were employed by the Respondent and by ACG.38

[61] The Commissioner found that “the overwhelming majority of the employees have been engaged by the new contractor on terms and conditions of employment that are essentially the same as those that applied when they were employed by FBIS”. 39 Read in context,40 the reference to the overwhelming majority of employees is a reference to employees other than Ms Pickering.

[62] Having regard to the authorities cited by Commissioner Gregory and the evidence before him, we are satisfied that his finding that the employment with ACG was acceptable employment was reasonably open to him, notwithstanding the detriment occasioned to some employees through the loss of accrued service with the Respondent.

Extent of reduction of employees’ entitlement to redundancy pay

[63] In considering whether the employment provided was “acceptable” the Commissioner found that considerations such as work of a like nature, pay levels, hours of work, workload, work location, travelling time, terms and conditions of employment disclosed little or no change as between the employment with the Respondent and ACG. The Commissioner also gave consideration to the loss of accrued service, noting that of redundancy payments that now appear in s.119 of the Act are, in part, intended to compensate employees for the loss of such entitlements. 41 He noted that entitlements in respect of annual leave and long service leave (where a current entitlement existed) were paid out but employees have suffered some detriment from the loss of accrued service by changing employment, although such detriment was difficult to quantify.42

[64] The Commissioner conflated the issues of acceptable employment and the extent to which the redundancy payments should be reduced by him as a matter of discretion. Having noted that the onus of establishing that the alternative is acceptable also rests with the employer, and the Commission may remove a redundancy benefit obligation entirely, or may instead reduce it, 43 the Commissioner considered the general terms and conditions of the two employments and the loss of accrued service in the employment with ACG, finding on balance that the ACG employment was acceptable employment. He then proceeded to determine that the redundancy entitlement should be removed altogether for all employees other than Ms Pickering, whose entitlement was halved on the basis that her employment with ACG was at a lower classification.

[65] In respect of the employees, other than Ms Pickering, the Commissioner conflated the issues of acceptable employment and the extent of any reduction in redundancy entitlements, concluding that “I am accordingly satisfied the test of what is acceptable alternative employment has been satisfied and FBIS should be relieved of any obligation to make redundancy payments”. 44 Having recognised some detriment to employees arising from the loss of accrued service and the role, in part, of compensating employees for the loss of service related entitlements, the Commissioner removed the redundancy entitlements entirely for each employee other than Ms Pickering. The Commissioner did so without separately considering the extent of any reduction and without considering the different circumstances of each employee in terms of service, which ranged from four months to nine and a half years, and accrued personal leave which ranged from a negative accrual through to over 300 hours.45 The decision of the Commissioner provides no indication as to how he reached that conclusion in exercising the discretion to reduce the redundancy pay entitlements in respect of each employee subject to his first order to nil. In our view, this constitutes a further error in the decision of Commissioner Gregory.

Conclusion

[66] We find that Commissioner Gregory erred in finding that the Respondent had obtained employment with ACG for the employees subject to his orders. That finding was not open to him on the evidence given the limited actions of the Respondent which did no more than facilitate the entry of its employees into the recruitment processes of ACG.

[67] We grant the appellant permission to appeal, uphold the appeal and quash the decision and orders of Commissioner Gregory.

[68] We find that the Respondent did not obtain acceptable employment for its employees with ACG and, as a result the jurisdictional basis for the making of an order under s.120 of the Act within s.120(1)(b)(i) has not been established. The application by the Respondent for an order under s.120 of the Act is dismissed.

SENIOR DEPUTY PRESIDENT

Appearances:

A Howell with A Jacka for The Maritime Union of Australia.

R Millar for FBIS International Protective Services (Aust) Pty Ltd.

G Starr for United Voice.

Hearing details:

2014.

Melbourne via Sydney video:

September 15.

1 [2014] FWC 1922.

2 PR550814 and PR550817.

3 PR550817.