[2015] FWC 313 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.120—Redundancy pay
Claytons (Aust) Pty Ltd
v
Troy Galea
(C2014/7972)
COMMISSIONER GREGORY |
MELBOURNE, 3 MARCH 2015 |
Variation of redundancy pay.
[1] Mr Troy Galea was employed by Claytons (Aust) Pty Ltd (“Claytons”) as a driver delivering flatpack joinery products to its customers. However, he was one of seven employees made redundant in October last year due to changed operational requirements. The other six employees accepted redeployment with Claytons, or left to work elsewhere.
[2] Claytons says Mr Galea was offered other work within the business. It also arranged for him to continue to work as a driver with another employer. It submits in all the circumstances it should not be required to make a redundancy payment to him.
[3] However, Mr Galea says he has been a loyal and diligent employee with Claytons over a period of more than 7 years. He also says the positions offered at Claytons were not suitable for him, and his entitlements and continuity of service would not have been maintained if he accepted the offer of work elsewhere.
[4] Claytons was represented in the proceedings by its Human Resources Manager, Ms Joanne Topalov. Mr Galea appeared on his own behalf.
[5] Section 120 of the Act enables an application to be made to the Commission for variation of redundancy pay entitlement. It states:
“(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.” 1
[6] Therefore:
1. Has Clayton’s obtained “other acceptable employment” for Mr Galea as defined in s.120 of the Act?
2. If so, is it appropriate for the Commission to exercise its discretion to reduce the amount of the redundancy pay entitlement otherwise due to Mr Galea?
[7] There is no real dispute between the parties about the facts in this matter. A statement provided by Ms Topalov on behalf of Claytons indicated Mr Galea was employed as a driver delivering flatpack joinery products to its customers. This also involved loading and unloading products from the truck. While employed in this role he was based at premises in Laverton North.
[8] However, changes in operational requirements involving outsourcing of the delivery functions meant this position, together with six other positions, were made redundant. Each of the employees, apart from Mr Galea, accepted redeployment either internally in ongoing positions with Claytons, or obtained work elsewhere.
[9] Ms Topalov’s statement indicated that during the consultation process about the impending redundancies Mr Galea was offered one of two ongoing positions with Claytons. Firstly, a pick/pack position within the dispatch area and, secondly, a machine operator role within the manufacturing/factory area. Both positions were at other premises, but still located in Laverton North. Ms Topalov estimated they were approximately three kilometres from the location Mr Galea was currently working at. The pick/pack role was a day shift position, while the machine operator role was only available on either afternoon or night shift.
[10] Ms Topalov said she believed the pick/pack role was most suitable to Mr Galea, by way of an alternate position, because he had been dealing with the flatpack products over a considerable period of time and understood what was required in regard to loading and unloading those products.
[11] She said Claytons believed Mr Galea was more than capable of performing this role, taking into account his skills and experience, and his pay rate would remain the same, with all of his leave entitlements and continuity of service maintained.
[12] Ms Topalov also indicated in her statement that Claytons arranged for another transport company, Ron Couch Transport, (“RCT”) to offer employment as a driver to Mr Galea. She indicated this position was also located in Laverton North and Claytons had done a number of things to arrange for this opportunity to be provided to Mr Galea. This included making arrangements for RCT to make contact with Mr Galea, as well as providing his contact details. Claytons also provided a written reference to RCT on behalf of Mr Galea, and discussed the terms and conditions that would apply if he accepted the offer of employment. It also attempted to secure continuity of service and maintenance of his accrued entitlements, but this was not successful.
[13] Mr Galea was paid out all of his accrued annual leave and long service leave entitlements at the time of leaving Claytons, and would have commenced as a new employee from day one had he accepted the offer of employment at RCT. He would also have lost any accumulated personal leave on leaving his employment with Claytons, however, Ms Topalov indicated he had no personal leave accrued at the time and therefore would not have suffered any loss in this regard.
[14] Ms Topalov indicated she provided details of the position being offered at RCT to Mr Galea in early October, including information about the position title, duties, hours of work, employment type, skills and qualifications required, and the location. She said she believed the base rate of pay being offered by RCT was higher than Mr Galea was currently receiving at Claytons, and the other conditions of employment would be at least comparable.
[15] A copy of a Statutory Declaration from Mr John Willitts, the Business Development Manager at RCT, was also attached to her statement. It indicated the drivers at Claytons were being made redundant because of a contract entered into between Claytons and RCT, which involved the outsourcing of the transport and logistics operations involved in Claytons’ business. The Statutory Declaration indicated Mr Willitts had discussions with Mr Galea and met with him on 28 October to confirm an offer of employment, pending a satisfactory medical examination. The statement indicated Mr Galea verbally accepted the offer but at some later point indicated he no longer intended to take it up.
[16] Mr Galea indicated he was offered redeployment by Claytons, however, the roles and duties were completely different, and involved a different location and a different classification. He indicated he has never worked in a pick/ packer role in a warehouse, or as a machine operator in a factory, and had instead only been employed as a truck driver during his period of more than 7 years employment with Claytons. He also indicated in a statement he provided to the Commission that he was not able to work afternoon shift, due to his family commitments, and the roles being offered by Claytons were not what he wished to pursue, given his future goals and objectives.
[17] He confirmed he was offered alternative employment with RCT in a similar role to the position he had been employed in at Claytons. However, he understood his accrued entitlements and continuity of service would not be transferred if he accepted this role. He also indicated in his statement he finally decided to accept a job with another employer that he believed provided better opportunities for him.
[18] He indicated, in conclusion, he believed his service with Claytons warranted him receiving a redundancy payment, given the circumstances involved in his departure.
[19] Sections 119 and 120 of the Act form part of the National Employment Standards and prescribe minimum standards in respect of notice of termination and redundancy pay. Section 119 sets out the amount of redundancy pay to which an employee is entitled, subject to any variation under s.121, and the exclusions contained in s.120. The provisions contained in s.120 have already been set out in full at an earlier point and are not restated now.
[20] Claytons submits in support of its application that Mr Galea was provided with two offers of “other acceptable employment,” and in these circumstances the Commission should exercise the discretion available to it in s.120 and reduce the amount of redundancy pay to Mr Galea. It submits it should be reduced to nil. Each of the offers of “other acceptable employment” relied upon by Claytons in the application raise separate issues for consideration.
Ongoing employment with Claytons
[21] Mr Galea was employed for 7 years by Claytons as a truck driver which involved him loading, delivering and unloading flatpack joinery products. He worked a day shift roster and was based at premises in Laverton North. Two options were offered to him by way of ongoing employment with Claytons. Firstly, a pick/pack forklift driver/storeperson position, which was indicated to include picking and packing of kitchen and cabinetry orders, including some heavy lifting, and forklift operation. This was offered as a day shift role and was indicated to be the position Claytons believed was best suited to him, given his previous experience with loading and unloading flatpack products.
[22] The other option was as a machine operator and involved the operation of beamsaw and edgebanding machinery. This was only offered on the basis of either an afternoon or night shift roster.
[23] Mr Galea indicated in response he had been employed as a driver throughout his employment with Claytons and wished to continue to pursue that career. He said he had no previous experience working in a pick/pack storeperson role, or as a machine operator in a factory and, in any case, was unable to take on an afternoon or night shift roster, given his existing commitments away from work.
[24] What constitutes other acceptable employment was considered by a Full Bench of the then Australian Industrial Relations Commission in Tontine Fibres & National Union of Workers – Mooroolbark Site Enterprise Partnership Agreement 2005 2. It, firstly, concluded (references omitted):
“It is well established, and common ground in the appeal, that the concept of acceptable alternative employment is to be determined objectively. As noted by a Full Bench in Australian Chamber of Manufacturers v Derole Nominees Pty Ltd:
‘What constitutes “acceptable alternative employment” is a matter to be determined, as we have said, on an objective basis. Alternative employment accepted by the employee (and its corollary, alternative employment acceptable to the employee) cannot be an appropriate application of the words because that meaning would give an employee an unreasonable and uncontrollable opportunity to reject the new employment in order to receive redundancy pay; the exemption provision would be without practical effect.
Yet, the use of the qualification “acceptable” is a clear indication that it is not any employment which complies but that which meets the relevant standard. In our opinion there are obvious elements of such a standard including the work being of like nature; the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.’
The onus of establishing that the alternative employment in question is acceptable rests with the applicant employer. In order to establish whether the alternative employment obtained by the employer is acceptable it is necessary to have regard to 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). It is also quite clear from the text of the provision that the Commission may remove the employer’s severance benefit obligations completely or may simply reduce them.” 3
[25] The decision of SDP Watson in Feltex Australia Enterprise Agreement 2004 4 is also noted. SDP Watson stated at [89]:
“I accept the proposition advanced by Feltex Australia that acceptable alternative employment is not necessarily identical employment and that the AIRC has previously found alternative employment to be acceptable notwithstanding inconvenience to employees and some detrimental alteration to the terms and conditions of employment.” 5
[26] However, it is also noted that SDP Watson was not satisfied, after an extensive review of the comparable arrangements under consideration in that matter, that acceptable alternative employment was being provided in all the circumstances.
[27] Further guidance can also be found in other decisions. In Von Bibra Robina Autovillage Pty Ltd 6 SDP Richards considered the circumstances of an employee whose role as a Used Car Assistant Manager was made redundant and an offer of a position involving a vehicle sales role offered to him instead. In considering the two roles SDP Richards concluded (references omitted):
“[25] It must be said that the offer of a position in Sales was not an offer of alternative employment that was in any way incompatible with or foreign to the employee’s work experience. The employee was mechanically qualified, had been in the industry for an extended period and possessed a considerable knowledge of vehicle valuations and the market, and he had attended sales courses of varying types in the past. It would be reasonably expected that such an employee could make the most of the new role in Sales and position himself, as the Applicant testified, for used car dealership management role in the future. This appears to have been the assumed and not unreasonable view of his employer in offering the Sales position. But it is an inherently subjective view, nonetheless, as it is based on a presumption about the transferability of the employee’s actual and known skills and his prospects of performance in a modified work environment where the skills set differs.
[26] In contrast, the objective test of acceptability appears to be that the alternative work bears a sufficient comparability to the original work and is not unreasonably removed from the employee’s original duties, skills set, qualifications, experience and other terms and conditions of employment. The test is not whether or not the employee is capable of carrying out the new employment as such, it is whether there is sufficient correlation between the relevant indicia of the current work and the alternative employment as proposed.
[27] In the current circumstances, the objective test demonstrates that the alternative employment is too far removed from the former position in terms of remuneration arrangements and key functions and skills to be considered to be acceptable alternative employment in the sense contemplated by the Full Bench in Re: Derole.
[28] Critically, in the Commission’s view, the transfer to a retail sales position from a wholesale sales position which is removed from the buying public itself demonstrates that the alternative work is not acceptable on the objective test. That is, the alternate employment has insufficient connection with the employee’s demonstrated skill set and experience. The employee has grounds, therefore, to consider his employment in retail sales, places him in more precarious circumstances overall than if his former duties were still available.” 7
[28] In Mantra Hospitality (Admin) Pty Ltd 8 DP Sams considered the situation of an employee employed as a housekeeping supervisor, but subsequently offered a role as a level 2 attendant. It involved a reduction in salary of $4 per hour. DP Sams concluded:[40]
“Even if I be wrong about my earlier findings as to Ms Miloskovska’s circumstances ‘immediately before the termination’, I am satisfied that the offer of a Housekeeping Attendant role to a person who had been a supervisor for two continuous years, does not meet the test of ‘acceptable employment’, as contemplated by the relevant authorities and the statutory provisions. I respectfully agree with SDP Richards in supra above, that the test is not whether the employee can carry out the new employment.” 9
[29] He concluded the significant cut in salary, in particular, meant the proposed offer could not be characterised as being acceptable employment, and the employee was entitled to reject that offer.
[30] I now turn to consider the present matter against the background of these authorities. Mr Galea was offered a pick/pack role in the warehouse on the same terms and conditions of employment as he enjoyed when working as a driver. He would also have remained in employment with Claytons and his continuity of service and accrued entitlements would have been maintained. The warehouse was at a different location, but in the same suburb and less than three kilometres away, and this does not appear to have been a significant issue.
[31] The principal difference clearly involved the nature of the work. Mr Galea had worked for Claytons for more than seven years as a truck driver. This did involve loading and unloading of large packages, but there appears to be no dispute that the principal role involved driving a truck. Claytons submitted Mr Galea’s skills in loading and unloading the vehicle during the course of deliveries meant he was well suited to the role in the warehouse, which also involved a significant amount of manual labour involving large packages. I accept that this is the case, but also acknowledge that there are clearly significant differences between the work involved in driving a truck, and the work involved in picking and packing and operating a forklift in a warehouse.
[32] Mr Galea clearly did not want to take on this role given that he had never performed this work and indicated his objective was to continue to pursue his career as a truck driver. However, his subjective views are not necessarily relevant to the determination of this matter, which requires it be determined from an objective standpoint. However, having regard to the differences between the two roles I am not satisfied the objective test of acceptability, based around whether the work being offered bears a sufficient comparability to the original work, has been met, given Mr Galea’s demonstrated skills and previous experience.
Employment with John Couch Transport (“JCT”)
[33] The other offer of employment relied upon by Clayton in support of its application is the offer of employment with JCT. It submits it was instrumental in obtaining this offer for Mr Galea.
[34] A recent Full Bench decision in Maritime Union of Australia v FBIS International Protective Services (Aust) Pty Ltd 10 dealt with an appeal from the decision of a single member concerning an application made under s.120. In the course of handing down its decision the Full Bench referred to two earlier decisions that have considered what “obtains” means in the context of obtains other acceptable employment. The Full Bench stated (references omitted):
“[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.’ [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.’
[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.
[44] In Allman v Teletech International Pty Ltd, 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.’
[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.’
[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. 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.’” 11
[35] The Full Bench indicated, in conclusion, that the original finding that the Applicant had done enough in all the circumstances to obtain alternative employment for the employees was incorrect, and the evidence indicated instead it had done no more than facilitate the entry of its employees into the recruitment processes of the new contractor.
[36] It also gave consideration to what constitutes “other acceptable employment” and concluded a finding that the employment was acceptable was reasonably open in the circumstances involved, “notwithstanding the detriment occasioned to some employees through the loss of accrued service with the Respondent.” 12
[37] Turning again to the present matter Claytons submits it arranged for another transport company to offer Mr Galea work as a truck driver. The other employer was, in fact, the business that was taking on Claytons’ outsourced transport and logistics operations and the evidence indicates the two companies were in discussions from the outset about finding work for the employees to be made redundant, as well as looking to recruit drivers to service the business JCT was taking on. The various actions Claytons took are set out in the statement provided by Ms Topalov. It also indicates she conveyed details of the offer from JCT to Mr Galea on 6 October. Claytons also submits the offer involved a rate of pay that was at least comparable to what Mr Galea was receiving prior to being made redundant.
[38] The Statutory Declaration provided by the Business Development Manager from JCT also indicates he was in regular communication with Ms Topalov, and she assisted with JCT’s recruitment process in order to employ drivers to service and support the new arrangements entered into between the two businesses.
[39] I am satisfied in all the circumstances that Claytons obtained “other acceptable employment” for Mr Galea through this process. As indicated, the decision in Derole makes clear that “obtains” does not mean obtain in the fullest sense possible because one employer is not capable of creating a legal relationship between its employees and another employer. VP Lawler expressed a similar view in Datacom.
[40] There is no suggestion in the present matter that Mr Galea’s details were simply provided to JCT to enable him to participate in a competitive recruitment process with a range of other employees. The evidence indicates instead that Claytons and JCT had been in close cooperation from the outset to find employment opportunities for the employees made redundant by Claytons, while also meeting JCT’s staffing requirements. I am satisfied that, subject to a satisfactory medical examination, an employment opportunity was available for Mr Galea at JCT if he chose to accept it. In all the circumstances it is difficult to see what more Claytons could be expected to have done to obtain employment elsewhere for Mr Galea.
[41] It is also necessary to consider whether the offer of work with JCT can be considered to be “acceptable employment.” There was little dispute between the parties that the role was similar to the work previously carried out by Mr Galea when employed by Claytons. It also appears the pay and conditions were at least comparable to those that previously applied at Claytons.
[42] The principal difference appears to involve the fact Mr Galea would have commenced as a new employee with JCT, and none of his accrued entitlements or his continuity of service at Claytons would have transferred with him. His accrued annual leave entitlements were paid out in full at the time he left Claytons and this is not an issue of any significance. He had been employed at Claytons for more than 7 years and was therefore entitled to have his long service leave entitlements paid out in full as well. This was also done.
[43] Mr Galea could also have suffered some detriment if he had significant personal leave entitlements accrued during his employment with Claytons, as these would have been lost when his employment at Clayton’s concluded. However, Ms Topalov indicated in response to a question from the Commission that Mr Galea had virtually no accrued personal leave at the time he was made redundant, so this is not an issue of any significance in terms of potential detriment to Mr Galea.
[44] It is acknowledged that Mr Galea could also suffer some detriment as well had he accepted the offer of employment at JCT in that he would not have had any accrued annual leave available if he wished to take annual leave shortly after commencing employment. He would instead have had to accrue an annual leave entitlement like any new employee. However, his accrued annual leave entitlements were paid out when he was made redundant from Claytons so he has had the benefit of this payment. The other potential detriment occurs in a similar way and involves his entitlement to long service leave. If he accepted the role at JCT as a new employee he would have to work for a further period of seven years, based on the current entitlement to long service leave in Victoria, before he had any further entitlement to leave. The extent of any detriment in these circumstances is obviously difficult to quantify and would ultimately depend on how long he remained in employment with JCT if he had he taken up that opportunity. However, again any detriment has been offset to some extent by the fact he received a payout of his long service leave in advance.
[45] I am accordingly satisfied in all the circumstances that the test of what is acceptable alternative employment has been satisfied by means of Claytons’ efforts to find employment for Mr Galea with JCT and Claytons should therefore be relieved of any obligation to make a redundancy payment to Mr Galea. An order to that effect will be issued in conjunction with this decision.
COMMISSIONER
Appearances:
Ms J Topalov appeared on behalf of Claytons.
Mr Galea appeared on his own behalf.
Hearing details:
2015.
Melbourne:
6 January.
1 Fair Work Act 2009 (Cth) at s.120
3 Ibid at [23]-[24]
5 Ibid at [89]
7 Ibid at [25]-[28]
9 Ibid at [40]
11 Ibid [42]-[46]
12 Ibid at [62]
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