DECISION

Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay

The Trustee For Beckworth Family Trust T/A Door World
(C2022/5550)

Variation of redundancy pay

[1] The Trustee for Beckworth Family Trust trading as Door World (Door World) has made an application pursuant to s 120(2) of the Fair Work Act 2009 (Act) to have the Commission reduce the redundancy entitlement of Mr Dean Martin, a former employee of Door World whose employment ended by reason of redundancy.

[2] Mr Martin was employed as a Joiner at Door World from 24 February 2020 until 22 August 2022. At the time Mr Martin’s employment ended, he had approximately two and a half years of continuous service with Door World. Accordingly, he is entitled to six weeks of redundancy pay.

[3] Door World contends that Mr Martin’s redundancy entitlement should be reduced by three weeks because it obtained for him an offer of employment as a Joiner at Jock Lewis Joinery, which constituted “other acceptable employment” for the purposes of s 120(1)(b)(i) of the Act.

[4] Mr Martin opposes the application.

[5] The application was the subject of a determinative conference before me on 7 October 2022. For the reasons that follow, I am satisfied that Door World has obtained other acceptable employment for Mr Martin within the meaning of s 120(1)(b)(i) of the Act.

Background

[6] Mr and Mrs Graham and Judy Beckworth owned and operated Door World, a joinery business based in Mornington, Victoria. In or around May 2022, Mr and Mrs Beckworth decided to retire. Employees of Door World were informed that the business operations would cease during discussions that took place on or about 16 May 2022. 1

[7] Mr Martin commenced employment with Door World as a Joiner on or around 24 February 2020, having previously worked in the aged care industry. 2 Mr Beckworth gave evidence that he was concerned for the future of Door World’s staff following the business closure and ascertained their desired future plans. It is not in dispute that Mr Martin wanted to continue to work as a Joiner. Mr Beckworth said:3

“Considering this I spoke with a local joiner Jock McKinnell who served his apprenticeship at Door World and then continued working in my joinery for several years had established his own business some years ago. Initially, working out of his shed and now operates his joinery out of a factory in the Dromana Industrial Estate. I approached Jock, explained the circumstances and asked if he would take Dean on as an employee. Jock advised me that the budget was tight but knowing Dean having been trained for the past 30 months at Door World he wanted to seriously consider employing Dean as a joiner.”

[8] Mr Martin subsequently attended Jock Lewis Joinery to meet with Mr McKinnell. This meeting took place sometime prior to Mr Martin commencing a pre-approved period of annual leave from 26 July 2022. Mr Martin said that during this meeting, he and Mr McKinnell discussed options for Mr Martin’s employment with Jock Lewis Joinery. Mr Martin said, “[o]ur discussion was Jock would tell me when he is ready for me to commence. He did so while I was away in England. We agreed for me to start on the 29^th of august [sic].” 4

[9] During the determinative conference, Mr Beckworth said that he understood from his subsequent discussions with both Mr McKinnell and Mr Martin that a verbal agreement had been reached during this meeting for Mr Martin to commence employment with Jock Lewis Joinery upon Mr Martin’s return from annual leave. Consistent with this, Mrs Beckworth gave evidence that Mr Martin confirmed with her that “he was going to work at Jock Lewis Joinery on his return from his holiday.” 5 Further, Mrs Beckworth’s evidence was as follows:6

“After Dean had visited Jock at Jock Lewis Joinery I heard open conversations in the office area that Dean was going to work with Jock in Dromana. I asked Dean what he thought of this opportunity and how he was feeling about the prospect of working with Jock. Dean responded really positively and talked of how pleased he was and said he had the feeling working with Jock was going to be more like a partnership than working for a boss. He said he was looking forward to working with Jock, it felt good.”

[10] On 20 July 2022, Door World issued Mr Martin with a termination letter which confirmed that his employment would end by reason of redundancy on 22 August 2022. The termination letter advised as follows: 7

“Since meeting you on Monday 16 May 2022 when I informed you of my decision to retire, sell the factory and close the business I have successfully sought employment for you with an alternative local joinery should you wish to pursue this pathway.”

[11] Mr Beckworth said that in late July and early August 2022, he had several phone conversations with Mr McKinnell “and I continued to follow up the employment arrangement with Jock and each time Jock confirmed his agreement to take Dean on.” 8

[12] On 17 August 2022, Mr Beckworth provided Mr McKinnell with a document titled “Offer of Employment for Dean Martin.” 9 The letter stated, “I am writing to you regarding your forthcoming employment of Dean Martin. As you are aware Dean is currently on annual leave and completes his employment with Door World on 22/08/2022. To assist in transition of employment please provide Dean with the basic terms and conditions of employment including:…” The letter proceeded to list the following matters, (a) job title, (b) employment type: full time/part time/casual, (c) commencement date, (d) hours of work per week, (e) work days and times, (f) base pay rate, (g) pay date intervals, (h) leave, and (i) notice requirements.

[13] Mr Beckworth gave evidence that he “negotiated” with Mr McKinnell the terms and conditions that would apply to Mr Martin in his employment at Jock Lewis Joinery. 10 In support of this position, Mr Beckworth produced a copy of his 17 August 2022 letter to Mr McKinnell which contained handwritten annotations that Mr Beckworth says were completed by Mr McKinnell and signed on 18 August 2022. Mr Beckworth said, “[t]hese were completed to the extent that Jock determined.”11 The handwritten annotations specify that Jock Lewis Joinery would employ Mr Martin on the following basis:

“Job title: Joiner

Employment type: Full time

Commencement date: 29 August 2022

Hours of work per week: 38

Work days and times: 7:30 – 4:00 ½ hour for lunch

Base pay rate:

Pay date intervals: weekly

Leave: 4 weeks

Notice requirements: 4 weeks”

[14] The only term not specified by Mr McKinnell in this document was the base rate of pay. Mr Beckworth’s evidence during the determinative conference was that the rate of pay was the only condition that Mr Beckworth “wasn’t going to enter into” as it was for Mr McKinnell and Mr Martin to negotiate this issue directly.

[15] Mr Beckworth said that “Jock demonstrated his commitment to the agreement he had made with Dean by visiting my home on Sunday 28/08/2022 to again sign an offer of employment for Dean. This offer was emailed to Dean with the request that he phone Jock and provide a copy of his written response to the offer…” 12 The document to which Mr Beckworth refers is dated 28 August 2022 and it reproduces the matters set out at [13] above, with the exception that it omits the reference to “base pay rate.”13

[16] It is not in dispute that Mr Martin received, on 28 August 2022, a copy of the written offer of employment from Mr McKinnell. Consistent with the terms of the offer, Mr Martin gave evidence that he presented for work at Jock Lewis Joinery on Monday 29 August 2022. Mr Martin said that he has been employed by Jock Lewis Joinery since that date, on terms consistent with the offer letter. He is employed as a full time Joiner, working 38 hours per week Monday to Friday. Mr Martin commences work at 7:30am and concludes at 4:00pm with 30 minutes for lunch. He is paid weekly and understands that he has a leave entitlement of four weeks and a four week notice period upon termination.

[17] With respect to his rate of pay, Mr Martin gave evidence as follows: 14

“When I knew Jock Lewis Joinery was taking me on as an employee the main reason I took the job was because of my redundancy as Jock confirmed with me my wage would be considerably less for an unknown period of time. Also my passion for joinery has kept me in the trade.”

[18] Further, during the determinative conference, Mr Martin’s evidence in respect of the rate of pay at Jock Lewis Joinery was as follows:

(a) Upon their first meeting, Mr Martin advised Mr McKinnell that he was being paid $34 at Door World. Mr Martin said that Mr McKinnell “straight away said he couldn’t pay me that, it would be closer to award wage.” Mr Martin’s position was “I said, well that’s fine. I should be receiving some redundancy. I can pay of some debt that I still have.”
(b) On his first day of work on 29 August 2022, Mr Martin asked Mr McKinnell, “what he wanted me to do first.” The subject of Mr Martin’s wage rate did not arise for “about a week.”
(c) When Mr Martin’s wage rate was discussed a week after his commencement at Jock Lewis Joinery, Mr Martin said that Mr McKinnell advised him he would be paid “base rate,” which Mr Martin said he understood to be “award wage, which I already knew what it was going to be.”
(d) Mr Martin said that that he is paid a base rate of $25.69 per hour by Jock Lewis Joinery, but he understands from Mr McKinnell that this rate will increase as soon as the business is able to.

Source of entitlement

[19] In the determination of Door World’s application, the Commission must first be satisfied that Mr Martin has an entitlement to redundancy pay “because of” s 119 of the Act. 15

[20] At all relevant times, Door World was covered by the Joinery and Building Trades Award 2020 (Award). The parties agreed that Mr Martin’s role as a Joiner was covered by the Award.

[21] The National Employment Standards (NES) in the Act prescribes minimum entitlements for employees in respect of redundancy pay upon satisfaction of the matters prescribed by s 119(1). The amount of redundancy pay to which an employee is entitled is set out at s 119(2) of the Act, subject to the application of ss 121, 122 and 123 which describe situations in which an employee does not have this entitlement. Relevantly, s 121(1)(b) provides that s 119 of the Act does not apply to the termination of an employee’s employment if, “immediately before the time of the termination, or at the time when the person was given notice of the termination” the employer is a “small business employer.”

[22] It is not in dispute that Door World was a small business employer with less than 15 employees at the relevant time. Accordingly, as a small business, s 119 does not apply to Door World by reason of s 121(1)(b) of the Act.

[23] Clause 37.4 of the Award specifies that it “supplements the NES” by providing redundancy pay for employees of a small business employer. There is no contest between the parties that:

(a) as a consequence of the business closure, Mr Martin is entitled to be paid redundancy pay by Door World because his employment was terminated “at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone” (clause 37.4(c)(i)); and

(b) the amount of redundancy pay payable to Mr Martin, having regard to his period of two and a half years continuous service with Door World upon termination, is six weeks’ pay (clause 37.4(d)).

[24] Pursuant to clause 37.4(f) of the Award, the terms of s 120 of the Act apply as if s 120 refers to “clause 37.4(c)” rather than “section 119.” Accordingly, it is not in dispute, and I am satisfied that the Commission can determine Door World’s application under s 120(2) of the Act by reference to the quantum of redundancy pay prescribed under clause 37.4 of the Award.

Did Door World obtain other acceptable employment?

[25] The next issue to be determined in this application is whether Door World obtained other acceptable employment for Mr Martin. If so, the Commission may determine under s 120(2) whether Mr Martin’s entitlement to redundancy pay should be reduced and, if so, the amount of any such reduction. 16

Did Door World “obtain” employment for Mr Martin?

[26] The decision of the Full Court of the Federal Court of Australia in FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia 17 (FBIS) considered the meaning of the term “obtain” in the context of s 120(1)(b)(i) of the Act. The Full Court concluded that “obtain” means the following:18

“With respect to the Full Bench’s reliance on the Shorter Oxford, the present might be one of those rare occasions on which it is useful to refer to the corresponding full entry in the Oxford English Dictionary itself. Relevantly, that reads:

To come into the possession or enjoyment of (something) by one’s own effort, or by request; to procure or gain, as the result of purpose and effort; hence, generally, to acquire, get.

We would not regard the references to ‘effort’, and to ‘purpose and effort’ in this meaning as implying the existence of some kind, much less a strong kind, of ‘moving force’ in bringing about the new state of possession referred to. They imply, rather, that the possession must be the result of the conscious, intended, acts of the person concerned, as distinct from, for example, coming into 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.”

[27] Further, any alternative employment must be obtained prior to the end of the employment relationship. 19

[28] Mr Martin contends that Door World did not obtain employment for him with Jock Lewis Joinery. He submits that “all [Mr Beckworth] had done was ask Jock if he would like me to work for him in which Jocks [sic] reply was yes.”

[29] It is not in contest that Mr Beckworth spoke to Mr McKinnell about the prospect of Jock Lewis Joinery employing Mr Martin. Mr Beckworth said that he “approached Jock, explained the circumstances and asked if he would take Dean on as an employee.” 20 Mr Beckworth’s evidence, which I accept, is that Mr McKinnell’s response was that “budget was tight” but knowing that Mr Martin had “been trained for the past 30 months at Door World he wanted to seriously consider employing Dean as a joiner.”21

[30] Mr McKinnell was not called to give evidence. However, Mr Martin said during the determinative conference that he was subsequently informed by Mr Beckworth that “Jock wanted me.” This is consistent with Mr Beckworth’s evidence during the determinative conference that Mr McKinnell decided he was “quite happy” to employ Mr Martin “because he’d become quite busy.”

[31] It is not in dispute that Mr Martin subsequently attended Jock Lewis Joinery to meet with Mr McKinnell prior to Mr Martin commencing a pre-approved period of annual leave from 26 July 2022. However, the parties did not agree about the manner in which this meeting came about.

[32] Mr Beckworth gave evidence that he spoke with Mr Martin and arranged for him to visit Mr McKinnell at Jock Lewis Joinery “to discuss with Jock about being employed by him.” 22 However, Mr Martin gave evidence that while Mr Beckworth “did tell me that Jock wanted me,” Mr Martin telephoned Mr McKinnell and asked if he “could go and speak to him” of his own volition.

[33] Mr Beckworth refutes any suggestion that Mr Martin initiated the meeting with Mr McKinnell. Mr Beckworth’s position is that he had to approach Mr Martin on two occasions to get Mr Martin to attend the meeting. He says that Mr Martin would not have known about the role with Mr McKinnell absent Mr Beckworth establishing the opportunity. Mr Martin accepted during the determinative conference that while he knew of Mr McKinnell through Instagram, he did not know him personally before their meeting.

[34] There is no evidence of Jock Lewis Joinery taking any steps to advertise or recruit for the role of a Joiner prior to Mr Beckworth’s meeting with Mr McKinnell to discuss an employment opportunity for Mr Martin. Rather, the evidence discloses that Mr McKinnell’s initial position was that “budget was tight.” I find that Mr Beckworth procured for Mr Martin the meeting with Mr McKinnell, and that Mr Martin’s meeting with Mr McKinnell was a direct result of Mr Beckworth’s purpose and effort. Mr Martin did not otherwise have a relationship with Mr McKinnell that may have led to such an opportunity, particularly in the absence of an advertised vacancy with Jock Lewis Joinery.

[35] At Mr Beckworth’s urging, Mr Martin telephoned Mr McKinnell to facilitate the time of the meeting. I accept Mr Martin’s evidence that during this meeting, he discussed with Mr McKinnell the wage that he would be paid for working at Jock Lewis Joinery. Mr Martin understood that it would be less than what he was earning with Door World and “closer to award wage.” Mr Martin said his response to this issue was: “well that’s fine. I should be receiving some redundancy. I can pay off some debt that I still have.”

[36] Mr and Mrs Beckworth each gave evidence that following this meeting, Mr Martin expressed that he “was looking forward to working with Jock” and confirmed that he would commence with Jock Lewis Joinery “on his return from his holiday.” Mr and Mrs Beckworth’s evidence was not the subject of challenge in this respect, and I accept it.

[37] On 18 August 2022, Mr McKinnell provided to Door World a document which set out the key terms and conditions under which Jock Lewis Joinery would employ Mr Martin. I accept Mr Beckworth’s evidence that this document bears Mr McKinnell’s signature. It confirms the commitment by Jock Lewis Joinery to employ Mr Martin from 29 August 2022 and the key terms attached to the offer.

[38] On 28 August 2022, upon Mr Martin’s return from holiday, Mr McKinnell provided a written offer of employment to Mr Martin by email. The terms of the written offer were identical to the 18 August 2022 commitment given to Mr Beckworth by Mr McKinnell. During the determinative conference, Mr Martin confirmed that he commenced employment with Jock Lewis Joinery on 29 August 2022 on the terms and conditions set out in the offer of employment dated 28 August 2022. I am therefore satisfied that the terms of that arrangement were accepted by Mr Martin when he presented for work at Jock Lewis Joinery on 29 August 2022 as arranged by Door World on 18 August 2022. Accordingly, the alternative employment was obtained prior the termination of Mr Matin’s employment at Door World on 22 August 2022.

[39] While the subject of wages was not addressed in either the 18 August or 28 August 2022 documents, I accept Mr Martin’s evidence that he “already knew what it was going to be” and that he would be paid “closer to award wage.” Consequently, Mr Martin did not discuss his rate of pay with Mr McKinnell until a week after his commencement date. Accordingly, there is no basis for any contention that a key term of the employment relationship between Mr Martin and Jock Lewis Joinery was unknown.

[40] Having regard to the above matters, and the conclusions reached, I find that Mr Martin’s employment with Jock Lewis Joinery arose as a result of Mr Beckworth’s conscious and intended actions prior to the termination of Mr Martin’s employment at Door World. This included Mr Beckworth meeting with Mr McKinnell to secure the opportunity and negotiating the substantive terms of employment directly with Mr McKinnell prior to Mr Martin’s employment with Door World ceasing. While Mr Beckworth refrained from negotiating the specific wage rate payable to Mr Martin, I accept Mr Martin’s evidence that he understood what his rate of pay would be as this was communicated to him directly by Mr McKinnell during their meeting.

[41] Consistent with the meaning of the term “obtain” as explained by the Full Court in FBIS, I find that Door World procured or gained, as the result of Mr Beckworth’s purpose and effort, the role for Mr Martin. I am therefore satisfied that Door World obtained for Mr Martin employment with Jock Lewis Joinery.

Is the alternative employment “acceptable?”

[42] The question of whether particular employment for an employee is acceptable is said to be determined according to objective standards. 23 The onus of establishing whether the employment is “acceptable” lies with the applicant employer. The Full Bench in Re National Union of Workers24 observed that it is necessary to have regard to all of the circumstances, such as pay, hours of work, duties, benefits, job security and employment location. The alternative employment need not be identical,25 and may even be on less advantageous terms when compared to the original position.26

[43] Door World contends that the employment it procured for Mr Martin with Jock Lewis Joinery constitutes “other acceptable employment.” It submits that:

(a) The employment with Jock Lewis Joinery is of a “like nature” to Mr Martin’s work at Door World, being the building and joinery of special-order doors and windows from select timbers.
(b) The hours of work at Jock Lewis Joinery are consistent with the hours Mr Martin performed at Door World, being 38 per week with the same standard start and finish times.
(c) The location of the employment with Jock Lewis Joinery requires Mr Martin to travel a further five minutes from his home when compared to his travel time to Door World.
(d) The pay arrangements for his role with Jock Lewis Joinery comply with the requirements of the Award.
(e) The job security associated with his role at Jock Lewis Joinery compares favourably with the position at Door World. Moving forward, it is submitted that employment at Jock Lewis Joinery is likely to have greater long-term prospects than those available at Door World.
(f) The similarity between Door World and Jock Lewis Joinery provides similar opportunities to Mr Martin to secure fringe benefits such as in the craftsmanship of personal pieces of furniture for his home.
(g) The career opportunities for Mr Martin exceed those at Door World, providing Mr Martin with a similar, or perhaps greater scope for career progression.

[44] Mr Martin submits that the role is not “acceptable.” He says that travel time from his residence to his location of work has increased by nine minutes to 31 minutes. Further, Mr Martin says that his base rate of pay has decreased from $34 per hour at Door World to $25.69 per hour with Jock Lewis Joinery. Mr Martin also pointed to the additional requirement to commence learning the skill of building furniture at Jock Lewis Joinery. However, Mr Martin accepted that this in fact provides him with a career opportunity that he did not have at Door World.

[45] Having regard to the evidence given, I accept that the role with Jock Lewis Joinery has the same title, duties and hours of work, and is in a broadly similar location to Door World. The only identified point of difference in the duties performed is that Mr Martin’s new employment duties include furniture building, which Mr Martin accepted could be performed with additional training and in fact provides him with scope for career progression.

[46] I do not regard Mr Martin’s additional travel time, whether it is five minutes or nine minutes, to weigh against a finding that the alternative employment is acceptable.

[47] Further, while Mr Martin’s employment with Jock Lewis Joinery provides Mr Martin with a reduced salary, I consider this is to be weighed against the evidence that (a) Mr Martin sought to find continuing employment as a Joiner, (b) Mr Martin has scope to enhance his skills as a Joiner at Jock Lewis Joinery and thereby advance his chosen career, and (c) Mr Martin gave evidence that Jock Lewis Joinery has committed to increasing his rate of pay.

[48] I am satisfied, on balance, that the alternative employment with Jock Lewis Joinery constitutes “other acceptable employment” for the purposes of s 120(1)(b)(i) of the Act.

Appropriate to reduce redundancy pay?

[49] As I am satisfied that Door World obtained other acceptable employment for Mr Martin, I must now consider whether to exercise my discretion to reduce the amount of Mr Martin’s redundancy pay. This requires a broad evaluative judgment as to what is "appropriate."

[50] Mr Martin gave evidence that he was relying upon a payment of six weeks’ redundancy pay to “pay off some debt” and to mitigate against the reduction in his base salary at Jock Lewis Joinery. These matters may weigh against the exercise of the discretion. However, they are to be balanced against my conclusion that Door World obtained other acceptable employment for Mr Martin in his chosen field and in a role that offers career progression with a commitment to an increase in salary. During the determinative conference, Mr Martin confirmed that a reduced payment of three weeks’ redundancy pay would not necessarily cover his debt but “would certainly help.”

[51] On balance, and after careful consideration of all the circumstances, I have decided to exercise my discretion to vary the redundancy pay to which Mr Martin is entitled to three weeks’ pay.

Conclusion and disposition

[52] I have determined to reduce Mr Martin’s redundancy pay to three weeks’ pay. Pursuant to s 120(3) of the Act, any determination by the Commission for a reduced amount of redundancy pay then becomes the employee’s redundancy pay entitlement.

[53] An order specifying my determination is issued with this decision in PR747272.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

<PR747078>

Appearances:

Mr G Beckworth and Mrs J Beckworth, for the applicant
Mr D Martin, on his own behalf

Hearing details:

7 October 2022, by Microsoft Teams

 1   Exhibit 1 (Witness statement of Mr Graham Beckworth) at p.2

 2   Exhibit 1 at p.1

 3   Ibid at p.2

 4   Exhibit 3 (Witness statement of Mr Dean Martin dated 26 September 2022) at p.2

 5   Exhibit 2 (Witness statement of Mrs Judy Beckworth) at p.1

 6   Exhibit 2 at p.1

 7   Termination letter dated 20 July 2022

 8   Exhibit 1 at p.2

 9   Letter from Door World to Jock Lewis Joinery dated 17 August 2022

 10   Exhibit 1 at p.2

 11   Exhibit 1 at p.2

 12   Exhibit 1 at p.2

 13   Offer of employment for Dean Martin dated 28 August 2022

 14   Exhibit 3 at p.1

 15   See, Maritime Union of Australia, The v FBIS International Protective Services (Aust) Pty Ltd [2014] FWCFB 6737 at [23]-[33]

 16   Ready Workforce (A Division of Chandler Macleod) Pty Ltd t/a Chandler Macleod v Andrew Lowe and Ors [2022] FWCFB 173 at [23]; Australian Commercial Catering Pty Ltd v Powell & Togia [2016] FWCFB 5467 at [35]

 17   [2015] FCAFC 90; 232 FCR 1; 250 IR 476

 18   Ibid at [20]

 19   Electricity Wizard Pty Ltd v Tauiliili [2018] FWC 4556 at [24]

 20   Exhibit 1 at p.2

 21   Exhibit 1 at p.2

 22   Exhibit 1 at p.2

 23   Australian Commercial Catering Pty Ltd v Fair Work Commission [2015] FCAFC 189; 235 FCR 441 at [48]-[51]; Clothing & Allied Trades Union of Australia v Hot Tuna Pty Ltd (1988) 27 IR 226

 24   (2007) 168 IR 143 at [24]

 25   Spotless Services Australia Limited t/as Alliance Catering [2016] FWC 4505 at [65]

 26   Datacom Systems Vic Pty Ltd v Rasiq Khan; Siddharth Desai [2013] FWC 1327 at [9]