[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.

Introduction

[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.

The Issue to be Determined

[5] Section 120 of the Act enables an application to be made to the Commission for variation of redundancy pay entitlement. It states:

[6] Therefore:

The Evidence and Submissions

[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.

Consideration

[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):

[25] The decision of SDP Watson in Feltex Australia Enterprise Agreement 2004 4 is also noted. SDP Watson stated at [89]:

[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):

[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]

[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):

[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.

Seal of the Fair Work Commission with Member's signature

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

 2   [2007] AIRC FB 1016

 3   Ibid at [23]-[24]

 4   PR974699

 5   Ibid at [89]

 6   [2007] AIRC 397

 7   Ibid at [25]-[28]

 8   [2013] FWC 1063

 9   Ibid at [40]

 10   [2014] FWCFB 6737

 11   Ibid [42]-[46]

 12   Ibid at [62]

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