Fair Work Act 2009
s.604—Appeal of decision

Appeal against the decision [[2014] FWC 2432] and order [PR549581] in matter number C2014/3631 and the decision [[2014] FWC 2431] in matter number C2014/3632 of Commissioner Roe at Melbourne on 10 April 2014 - s.120 - other acceptable employment.

DECISION OF DEPUTY PRESIDENT GOOLEY AND COMMISSIONER BLAIR

[1] This is an appeal by Australian Commercial Catering Pty Ltd (ACC), made under s.604 of the Fair Work Act 2009 (the FW Act) against two decisions made by Commissioner Roe. The first decision 1 and Order2 related to Mrs Powell and the second decision,3 was in relation to Mrs Togia.

[2] Those decisions were made with respect to an application made by ACC under s.120 of the FW Act. That application sought to reduce the amount of redundancy pay otherwise due to Mrs Powell and to Mrs Togia to nil. In the decision which applied to Mrs Powell 4 the Commissioner reduced Mrs Powell’s redundancy entitlement to 33% and ordered that ACC pay Mrs Powell an amount of $3254.50. In the decision applicable to Mrs Togia the Commissioner dismissed the ACC s.120 application.

The Appeals

[3] The Commissioner’s decisions were issued on 10 April 2014. The appeals were lodged on 22 April 2014. A stay of the Commissioner’s decisions was sought. Due to an apparent administrative oversight, the appeal was not referred to the Full Bench for determination until 5 October 2014. Following a hearing on 16 October 2014 a stay was issued on 20 October 2014. 5

[4] The appeals were the subject of a hearing in Melbourne on 11 December 2014.

[5] At this hearing Mr Darmos, of counsel represented ACC. Mr Darmos is the proprietor of ACC and hence no consideration of s.596(2) was required. Mrs Powell and Mrs Togia represented themselves.

[6] The appeal, with respect to the Commissioner’s decision relating to Mrs Powell was made on the basis that decision was:

● inconsistent with established principles and decisions and hence misapplied s.120,
● amounted to compensation for relocation, and
● was erroneous when the Commissioner found that the alternative employment was not unsuitable.

[7] The appeal with respect to the Commissioner’s decision relative to Mrs Togia was made on the basis that:

● Mrs Togia’s circumstances and those of Mrs Powell were virtually identical,
● the decision was founded on a misconstruction of the correspondence to Mrs Togia,
● the decision was inconsistent with established principles and decisions and hence misapplied s.120.

[8] ACC asserts that both appeals raise issues of public interest in that the decisions are counterintuitive and contrary to established principles. Additionally, ACC asserts that, if the Full Bench position in The Australian Chamber of Manufacturers v Derole Nominees Pty Ltd (Derole Nominees) 6 required review this would also raise issues of public interest.

Sections 119 and 120 of the FW Act

[9] These sections are part of the National Employment Standards (the NES). Section 119 specifies the amount of redundancy pay to which an employee is entitled. Exclusions from the obligation to pay redundancy pay are then set out in s.121.

[10] Section 120 provides the Fair Work Commission (the FWC) with the capacity to vary the amount of redundancy pay an employee is entitled to be paid because of s.119. This section states:

“120 Variation of redundancy pay for other employment or incapacity to pay

(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.”

The background to the s.120 applications

[11] Mrs Powell and Mrs Togia worked for ACC at the Robert Bosch site at Clayton in greater Melbourne on a full-time weekly hire basis. On 16 August 2013 ACC provided advice to both Mrs Powell and Mrs Togia that it had lost that contract effective from 25 October 2013. This advice confirmed the termination of their employment on that day unless one of the following four options occurred:

“a) You may seek to continue your employment with the new provider (Alliance Catering a division of Spotless) - If you are successful your full entitlements including final weeks pay, annual leave and loading, and any Long Service Leave entitlement will be paid to you directly.

b) You find alternative employment and resign prior to the finishing date with a new employer - Your wages and entitlements will be paid out as described in paragraph (a).

c) You take up another position with ACC - Your wages will continue to be paid as normal depending on the new position that you accept and your entitlements will continue to accrue with ACC.

d) There is no other position available with ACC and you are not successful in continuing with the new contractor. All entitlements will be paid to you including any redundancy payments as per the award.”

[12] This letter continued, to require that Mrs Powell and Mrs Togia confirm their intentions by 30 September 2013 to allow ACC to make appropriate arrangements. Mrs Powell and Mrs Togia unsuccessfully sought alternative employment with ACC and also considered employment opportunities with the new contractor. On 11 October 2013 ACC provided qualified advice about the amount of redundancy pay that may be payable to them. In what appears to be an erroneous reference to s.63 of the FW Act, this letter stated:

“Please be advised that under section 63(2)(a) of the National Employment Standards, Redundancy does not apply if:

The Employee rejects an offer of employment with the new employer on terms and conditions substantially similar to, and, considered on an over basis, no less favourable that, the employee’s terms and conditions of employment with the old employer immediately before the termination of that employment.”

[13] On or around 18 October 2013 Mrs Powell and Mrs Togia completed forms provided to them by ACC management in which they applied for redundancy payments.

[14] Sometime in October 2013 Mrs Togia accepted casual work with the new contractor (Alliance) at the Robert Bosch site.

[15] On 23 October 2013 ACC advised both Mrs Powell and Mrs Togia of ongoing employment offers at a work site at Tooronga (the Coles site). These offers applied from 28 October 2013 with the same employment hours and conditions. This advice stated:

“Please note that if you do not take up the Alliance or ACC offer you will not be entitled to the redundancy offer.”

[16] Mrs Powell did not take up casual employment with the new contractor and did not accept the position offered on 23 October 2013 at the Coles site. Mrs Togia advised ACC that she had accepted the casual employment with the new contractor at the Robert Bosch site.

[17] The Commissioner was given evidence about the reasons why both Mrs Powell and Mrs Togia decided on their respective courses of action. In terms of the Coles site position, these reasons were inherently similar in that they both related to personal difficulties associated with travel to that site.

[18] It is appropriate to note in passing that, following Mrs Powell’s and Mrs Togia’s employment terminations they both initiated unfair dismissal applications which were ultimately discontinued.

[19] With respect to Mrs Powell, the Commissioner set out the basis for his decision in the course of the hearing of this matter on 8 April 2014. He summarised the background to the matter and concluded that ACC had obtained suitable alternative employment for Mrs Powell such that it was entitled to a reduction in the redundancy payments due to her. The Commissioner considered Mrs Powell’s reasons for not taking up this 22 October 2013 offer in the following terms:

“PN421
Ms Powell has confirmed that she then in response to that on 25 October told the company that she wouldn't be taking up the ACC offer and also she did not take up the offer with Alliance. So I think that in that situation the employer has obtained other acceptable employment for the employee, so the employer has found other acceptable employment, which is the continuation of employment with ACC, so the employer has said they were prepared to continue employment. In that situation, I believe that the employer is entitled to a reduction in the amount of redundancy which is payable.

PN422
In considering what the reduction should be, the employer has sought that the amount be reduced to nil on the basis that the offer of employment was at the same rate of pay, the same conditions, maintained all leave entitlements, was of similar skills and the only negative factor of the new job is that it's in Tooronga, whereas the previous job was in Clayton and the employer argues that the distance between those two locations is not sufficiently great to mean that the offer of employment isn't suitable - the alternative employment isn't acceptable employment.

PN423
The employee raises two matters essentially: (1) that the process was one such that between August 16 and 23 October, she had reasonably come to the conclusion that she wasn't going to be offered suitable alternative employment with ACC and she was planning on that basis and it was unreasonable to require her to accept this alternative at such short notice; and secondly, she raises the question that her family has only one car and her husband works close to the former workplace and that to travel to Tooronga would involve some 35 minutes, she estimates, of travel in traffic.” 7

[20] The Commissioner balanced Mrs Powell’s travel concerns with the Coles site job offer to arrive at his reduction, by two thirds, of the redundancy amount payable to Mrs Powell.

[21] Relative to Mrs Togia, the Commissioner noted that Mrs Togia took up the offer of employment with Alliance consistent with the choices detailed to her in the correspondence from ACC of 16 August 2013 and 23 October 2013.

[22] The Commissioner detailed his conclusions about the 23 October 2013 ACC Coles site offer in the hearing on 8 April 2014 in the following terms:

“PN383
Then Ms Togia was provided with advice about what her redundancy package might be on 11 October and that's ACC 5. Ms Togia was advised that she might not receive redundancy if she rejected an offer with the new employer that was on terms and conditions that were substantially similar and not less favourable. It's clear that from what I have been told, and it's not been contested from Ms Powell and Ms Togia, that during the period between August and 25 October there had been - of course the employees had been looking at their options and asking whether or not there were any other alternative jobs available within the company and up until 23 October they had been told that there wasn't any and also they had been discussing with the new contractor whether or not there would be employment opportunities for them and what sort of employment opportunities there would be.

PN384
Then by 23 October the employees obviously didn't think that they were likely to get transfer within the company, but on 23 October they get told two days before their termination date that a new position was being offered to them and in that letter of 23 October it says:

PN385
The managing director of ACC has personally intervened due to your length of service, experience and loyalty to the company to offer you a position with us should you decline your offer with Alliance Catering.

PN386
Then it goes on later on in the letter:

PN387
Please note, if you do not take up the Alliance or ACC offer, you will not be entitled to the redundancy offer.

PN388
In response to that letter, Ms Togia has advised ACC that she didn't want to move to the Coles site and she has taken up an employment offer with Alliance Catering and so I'm satisfied that what Ms Togia has done is on a reasonable reading of the letter of October 23, consistent with that letter.” 8

[23] He continued:

“PN395
So I don't see any inconsistency whatsoever between those letters and I am satisfied that what Ms Togia did in taking up the employer with Alliance was not inconsistent with the letter of 23 October and, therefore, I then have to consider whether the job that she now has with Alliance is one which would justify a reduction in the redundancy payment entitlements. I'm certainly satisfied that it doesn't justify a reduction in redundancy paid entitlements in respect of Ms Togia because the fact is that the hours of work with the new contractor, that is with Alliance, are substantially less than the hours of work with the former employer, which is ACC, and therefore it's obviously less income and it is also less security because it is casual employment.” 9

Findings

[24] The appeal requires a grant of permission. Section 604(2) provides that the FWC must grant that permission if it considers that it is in the public interest to do so. We have considered this issue in the context of the findings set out below.

[25] The Commissioner’s decision with respect to s.120 was a discretionary one. Consequently, an error of the House v The King 10 type must be established in order to overturn the Commissioner’s findings. In Coal and Allied v AIRC Gleeson CJ, Gaudron and Hayne JJ discussed this notion of discretion in the following terms:

“19. "Discretion" is a notion that "signifies a number of different legal concepts". In general terms, it refers to a decision-making process in which "no one [consideration] and no combination of [considerations] is necessarily determinative of the result." Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made. The latitude may be considerable as, for example, where the relevant considerations are confined only by the subject-matter and object of the legislation which confers the discretion. On the other hand, it may be quite narrow where, for example, the decision-maker is required to make a particular decision if he or she forms a particular opinion or value judgment.” 11

(references removed)

[26] We have considered the exercise of that discretion in the context of the authorities relative to the acceptability of alternative employment. In this respect we have had particular regard to the decision in Derole Nominees. That decision, and the approach generally adopted by the FWC confirms the broad discretion available to the FWC in relation to s.120.

[27] On the material before him, the Commissioner was entitled to consider that the ACC correspondence of 16 August 2013 advised both Mrs Powell and Mrs Togia of four alternatives to the termination of the employment with ACC on 25 October 2013. That correspondence clearly asked both Mrs Powell and Mrs Togia to confirm their intentions by 30 September 2013. The Commissioner was entitled to conclude that despite numerous requests, ACC made no alternative employment offers before 30 September 2013 and indeed, until 23 October 2013. Further, the Commissioner was entitled to conclude that Mrs Powell and Mrs Togia returned the ACC redundancy payment requests on or around 18 October 2013. The Commissioner was entitled to take this factual matrix into account in considering the relevant circumstances.

[28] In both cases the employees’ employment with ACC was to come to an end on 25 October 2014. On 11 October 2014 both employees had been advised of their redundancy entitlement and both employees accepted that offer on or around 18 October 2014 and accepted that their employment would end on 25 October 2015.

[29] An employer may make a job redundant however the decision to terminate an employee’s employment occurs after the employer has determined that there are no suitable alternative positions available for the employee. At that time the employee is given notice of termination. An employer after that date, may, due to a change in circumstances, offer the employee another position and the employee may accept the position. Having given notice of termination, the employer may not unilaterally revoke the notice.

[30] We consider that the Commissioner erred in failing to have regard to this in determining if the alternative employment was suitable.

[31] The failure to have regard to a relevant consideration discloses an error of a House v The King type.

[32] The finding of a House v the King error does not automatically result in permission to appeal being granted. An appeal must only grant permission to appeal if it is in the public interest to do so. Despite the error identified, we agree with the conclusion reached by Commissioner Roe that the position offered by ACC to Mrs Togia was not acceptable alternative employment and as such we would make the same decision as Commissioner Roe in respect of Mrs Togia. Consequently we do not consider it in the public interest to grant permission to appeal in respect of Mrs Togia. We consider that a substantial injustice would result if permission to appeal were not granted in respect of the decision in respect of Mrs Powell as her circumstances were not sufficiently different to that of Mrs Togia to justify a different outcome. Accordingly, we uphold the appeal with respect to Mrs Powell. 12

[33] Having found error, it is necessary to determine for ourselves whether the position with ACC was acceptable other employment.

[34] On 23 October 2014, Mrs Powell had been given notice of termination of their employment. Mrs Powell did not agree to the revocation of the termination.

[35] We have had regard to change of location for Mrs Powell and the difficulties associated with the change of location. We have also had regard to the lateness of the offer to transfer Mrs Powell.

[36] We find that the late offer by ACC, combined with the difficulties faced by Mrs Powell in travelling to the proposed site, mean that objectively, the new position was not acceptable alternative employment.

[37] An Order (PR559739) reflecting this decision will be issued.

DECISION OF SENIOR DEPUTY O’CALLAGHAN

[38] I have had the benefit of considering the decision of the majority in this matter. I have set out below my reasons for adopting different conclusions about the appeal.

[39] The correspondence of 23 October 2013 from ACC to Mrs Powell and to Mrs Togia raises potential issues about the obligation to pay any redundancy entitlements specified in s.119 in terms of whether their employment was actually terminated by ACC. I do not consider that issue is a matter within the jurisdiction of the FWC. Simply put, issues associated with the right to redundancy pay under s.119 are matters for the Court. In MUA v FBIS International Protective Services (Aust) Pty Ltd 13 considered the operation of s.120 and stated:

“[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”.”

[40] Notwithstanding that in the course of the appeal ACC argued that Mrs Powell and Mrs Togia should not be considered to be redundant for the purposes of s.199, the applications made by ACC under s.120 commenced from the premise that Mrs Powell and Mrs Togia had been made redundant. As a consequence, I have considered whether the Commissioner’s conclusions were open to him pursuant to s.120, on the evidence that was put before him.

[41] In Mrs Powell’s case, it is implicit in the Commissioner’s conclusions that the employment offer with Alliance was not “other acceptable employment” for the purposes of s.120. None of the appeal arguments disputed the Commissioner’s conclusion that the ACC Coles site employment offer at Tooronga (the Coles site offer) was “other acceptable employment”. The Coles site offer may have been made just before the termination of Mrs Powell’s employment, but, in terms of ss.119 and 120, it was an offer communicated to her before the termination of her employment took effect. The Commissioner took the lateness of this offer into account in his decision. 14 Notwithstanding this, the Commissioner assessed the offer of ongoing employment with ACC at the Coles site at Tooronga as other acceptable employment. I cannot characterise that conclusion as an error simply because of the lateness of the advice provided to Mrs Powell about it. There is nothing in s.120 that is indicative of appealable error in this respect. It seems to me that the circumstances of many redundancy situations is such that late “other acceptable employment” offers may well arise and the Commission has the discretion to consider the timing of the offer as part of the considerations in s.120. Further, the Commissioner’s decision to discount the redundancy entitlements due to Mrs Powell by two thirds discloses no appealable error and simply reflects the discretion available to the Commissioner. I later deal with one aspect of the Order issued by the Commissioner with respect to Mrs Powell.

[42] In Mrs Togia’s case, I am similarly satisfied that the Commissioner correctly concluded that her employment with Alliance was not comparable to her previous employment with ACC and hence, did not represent “other acceptable employment” for the purposes of s.120.

[43] However, I think that the Commissioner fell into error in not taking the ACC Coles site offer into account relative to Mrs Togia and simply concluding that because she had accepted casual employment with the new contractor she was entitled to her full redundancy payment. 15 This represents a fundamentally inconsistent position in contrast to his approach to Mrs Powell’s situation. That inconsistency is not explained in the reasons for his decision. The Commissioner’s decision discloses no apparent consideration of whether the Coles site offer was suitable alternative employment for the purposes of s.120. Mrs Togia’s reasons for not accepting that Coles site offer were fundamentally the same as those which applied to Mrs Powell in that they related to transport difficulties. Given the Commissioner’s findings relative to the suitability of the ACC Coles site offer for Mrs Powell and what I consider to be his correct conclusion that the work with the new contract was not suitable alternative work, the absence of consideration of the Coles site alternative employment offer creates an irreconcilable inconsistency with respect to his decision relating to Mrs Togia. Had the Commissioner detailed a conclusion relative to the Coles site offer consistent with his position in relation to Mrs Powell, it would then have been open to him to take the lateness of that offer into account in his subsequent findings.

[44] The absence of consideration of the Coles site offer and consequent inconsistency in the conclusions reached by the Commissioner relative to Mrs Togia and Mrs Powell discloses an error of a House v The King type.

[45] Accordingly, I would uphold the appeal with respect to Mrs Togia and quash that decision. 16

[46] Having considered Mrs Togia’s circumstances, I consider that it would be appropriate to reduce any amount payable under s.119 by two thirds (2/3) for reasons of consistency with that applied by the Commissioner to Mrs Powell. This conclusion takes into account Mrs Togia’s transport difficulties associated with travel to the Coles site. Given the similarity of the situation confronting Mrs Powell and Mrs Togia relative to the Coles site offer, I consider that the same discount should apply.

[47] One last matter deserves comment. The Commissioner’s order relative to Mrs Powell states:

“[1] To the extent that Ms Powell is otherwise entitled to redundancy payment arising from the termination of her employment with Australian Commercial Catering Pty Ltd the amount of that redundancy payment shall be reduced to 33% of the entitlement specified in the correspondence to Ms Powell from Australian Commercial Catering Pty Ltd dated 17 October 2014; that is, the amount is reduced to $3,254.50.

[2] The Applicant is to pay Mrs Marcelia Powell an amount of $3,254.50.” 17

[48] The second paragraph of this Order causes me concern. Section 120 gives the FWC the jurisdiction to reduce an amount payable under s.119. I do not consider that it gives the FWC the jurisdiction to order that a specified amount be paid. Hence, to the extent that the Order purports to direct ACC to pay the amount of $3554.50, as distinct from reducing the amount payable to that figure, I think it is beyond the jurisdiction of the Commissioner.

[49] Accordingly, I consider it would be appropriate to quash the Commissioner’s Order and issue a revised Order which would specify the reduction in the amount payable under s.119.

Appearances:

P Darmos counsel and proprietor for Australian Commercial Catering Pty Ltd.

M Powell and M Togia on their own behalf.

Hearing details:

2014.

Melbourne:

December 11.

 1   [2014] FWC 2432

 2   PR549581

 3   [2014] FWC 2431

 4   [2014] FWC 2432

 5   PR556793

 6   Print J4414

 7   Transcript, 8 April 2014, PN421 - 423

 8   Transcript, 8 April 2014, PN383-388

 9   Transcript, 8 April 2014, PN395

 10   (1936) 55 CLR 499

 11   [2000] HCA 47, para 19

 12   [2014] FWC 2431

 13   [2014] FWCFB 6737

 14   Transcript, 8 April 2014, PN417-PN421

 15   Transcript, 8 April 2014, PN388

 16   [2014] FWC 2431

 17   PR549581, paras [1] and [2]

Printed by authority of the Commonwealth Government Printer

<Price code C, PR559732>