DECISION

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

Southern Cross Group Services Pty Ltd T/A Southern Cross Group
(C2018/4084)

S.120 application to vary NES redundancy pay entitlement to nil. Offer of other acceptable employment. Redundancy entitlement reduced in part

[1] Southern Cross Group Services Pty Ltd (the employer) has made two applications pursuant to s.120(2) of the Fair Work Act 2009 (the Act) to reduce the National Employment Standard (NES) redundancy entitlement to nil, for the following ex-employees:

● Mr Brendon Murphy
● Mr Branko Pavic
● Mr Adel Atta
● Mr Sajwant Singh
● Mr John Callaghan
● Mr Peter Grant

[2] Mr Izzo sought leave as a solicitor to appear on behalf of the employer. This was not opposed and leave was granted pursuant to s.596(2)(a) of the Act. The respondent employees appeared in person, however, there was no appearance from Mr Callaghan and Mr Grant.

[3] The employer seeks to reduce the redundancy entitlement of the named respondents to nil, on the basis that the respondents were each offered positions as a Security Officer. Although the new positions are classified as Level I, the employer was prepared to remunerate the positions at a Level 2 Armed Security Guard rate, being the same level attached to the previous positions of the respondents.

[4] The employees’ redundancy entitlements are said by the employer to be the NES entitlements which are provided for at clause 12.1 of the Security Services Industry Award 2010, which refers to the NES entitlement under the Act.

[5] The respondent employees who appeared at the hearing also attended an earlier Commission convened conference, 1 and opposed any reduction of their redundancy entitlement on the basis that the employer’s offer of alternate employment was not acceptable employment.

[6] As the matter could not be resolved at the conciliation conference, the matter was listed for arbitration.

[7] Unless otherwise stated the two applications are dealt with jointly.

[8] At the commencement of the hearing it became apparent that, despite directions having been issued advising the parties of a formal hearing and requiring witness statements and any other evidence to be filed, the respondent employees attended the hearing with the understanding that the proceeding was to be a further conference and thus did not provide witness statements or bring documentation required for a hearing. Despite this, the parties wished to proceed and every opportunity was provided to the respondent employees to put their case opposing the applications.

[9] The employer’s application in respect of Mr Pavic did not proceed on the basis that the employer was to consider medical evidence regarding Mr Pavic’s capacity to undertake the alternative role which he was offered.

Employer’s submissions

[10] The employer supported its application with the witness evidence of Mr Archie Petsas, the employer’s Head of People and Culture. Mr Petsas provided a witness statement 2 and gave evidence regarding the employer’s reasons for making the applications.

[11] In September 2013, the employer entered into a contract with Chubb to provide security services in relation to Chubb’s ATM operations. Chubb’s operations were subsequently purchased by Prosegur (who provide cash management services). In July 2017, Southern Cross entered into a contract with Prosegur to provide security services in relation to Prosegur’s ATM operations in Sydney. To carry out this work the employer employed a number of people in the position of Level 2 Armed Security Guard.

[12] On 4 July 2018, the employer advised all Front Line Response (FLR) Guards in a memo that the agreement between Prosegur and itself was due to end on 24 July 2018, and that following discussions with Prosegur the agreement to provide FLR Armed Guarding would not be renewed.

[13] Based on this decision employees were advised that there will be no armed guarding shifts available from close of business on 24 July 2018. Employees were further advised in the memo that due to the dramatically decreased job allocation and lowered resource needs, FLR Guards would be allocated static guarding shifts at a variety of other sites as there would be no armed guard work available from 24 July 2018.

[14] Subsequently, Mr Murphy was given a written job offer on 18 July 2018, to work as a Security Officers Level 1 at Woolworths Bankstown and similarly Mr Atta and Mr Singh at Woolworths Granville.

[15] The employer submitted that the positions offered to the employees at the Woolworths stores was acceptable employment that it had obtained for the employees and on that basis it should be relieved of the statutory obligation to make any redundancy payment to the employees.

[16] The positions offered were said to be acceptable despite the fact that they were Level I positions and not Level 2 on the basis that:

•  the employees would be paid the same rate of pay that they were previously earning, i.e. Level 2 including continued payment of a firearms allowance;

•  the employees would maintain their continuity of service;

•  there was a higher guarantee of minimum hours;

•  the new locations were approximate to their places of residence; and

•  the new positions carried a lower safety risk.

[17] At the conclusion of the hearing the employer was provided an opportunity to respond in writing by 5 November 2018, to matters raised by the respondents that they were not put on notice about. Further written submissions were subsequently received from the employer concerning obtaining a firearms licence and travel time.

Respondents’ submissions

[18] The employees submitted that the position of Security Guard Level 1 could not be seen as an acceptable offer for a number of reasons.

[19] These reasons included that the position of a Level 1 Static Guard has lower qualifications and was therefore less senior to that of a Level 2 Armed Guard. Despite being paid at the Level 2 rate, 3 the overall rate of pay was less due to rostering arrangements. The nature and duties of the work were completely different to those of Armed Guard duties and the location of the work site meant some employees would incur additional travelling costs.

[20] The overriding submission put was said to be the downgrading of the employees’ position and qualifications. Where an Armed Guard accepts the position of Security Guard Level I, they are no longer required to hold a firearms licence pursuant to the Firearms Act 1996 (NSW) and Firearm Regulations 2017.

Mr Atta

[21] Mr Atta gave evidence and submitted an email into evidence previously forwarded to the Commission on 8 August 2018. 4 Mr Atta stated that due to his age of 65½ years a position which required him to stand for the entirety of a 9 hour shift would cause him difficulties. In his previous position as an Armed Guard he was able to travel in a company supplied motor vehicle when visiting various ATM locations.

[22] Although Mr Atta did not produce any medical evidence at the hearing, he stated that he knew he could not accept a position that would impact on his health as he had been advised by his doctor that he needed to be careful of his back.

[23] Mr Atta stated that he had 16 years’ experience as an Armed Guard maintaining and keeping his firearms license up to date since February 2002. He also stated that he was required to undertake annual accreditation and complete training courses including Armed Robbery Survival and Gun Room SOP. He felt that moving to a Level 1 position was a demotion and a step back in his career despite the employer undertaking to maintain his wage rate at a Level 2.

[24] Mr Atta stated that as a Level I Security Guard there is no requirement to hold a Category H firearm license and this license would be unable to be renewed while he occupied a Level 1 Static Guard position as he would no longer possess a genuine reason to maintain a firearm license. On this basis he would not in the future be able to apply for work as an Armed Guard as he would not have the appropriate license. This position applied to all the respondents who attended the hearing. Mr Atta has a statutory entitlement of 8 weeks redundancy pay and had not been able to source work since his redundancy.

Mr Singh

[25] Mr Singh stated that he did not accept the employer’s offer as he was 68 years of age and would not be able to perform in the role as a Static Guard as he had a clot in a vein in his foot and could not stand for the entirety of a 9 hour shift as required in the new role offered by the employer. He was unable to stand for longer than half an hour any one time. He did not provide any medical evidence of this assertion and advised that since his redundancy he had secured another job as an Armed Guard on a casual basis that did not require lengthy standing.

[26] Mr Singh did not have the Class IC Security license – Crowd Control required to operate at the Level I position offered, but had not accepted the training offered by the employer to obtain this license. Mr Singh has a statutory entitlement to 8 weeks redundancy pay.

Mr Murphy

[27] Mr Murphy stated that he was 40 years of age and had obtained employment 3 to 4 weeks after his redundancy elsewhere in the security industry. He chose not to accept the job offer as a Level I Static Security Guard on the basis that this was a lesser position despite the employers undertaking to continue to remunerate him at a Level 2 pay rate. Mr Murphy stated that the Level I role is to act as a visual deterrent outside a shopping centre, whereas in his Level 2 role he provided first line maintenance and servicing for ATMs. It was this area of security work that he wished to remain involved in and which his current position with his new employer provides.

[28] Mr Murphy’s evidence 5 was that he was employed to fulfil the position of Armed Guard/FLM Technician which requires having additional qualifications to that of a Static Guard. He was required to have successfully completed all units of the Certificate 111 in Security Guarding, including Cash in Transit and Critical Infrastructure for Armed Guarding and is required to maintain a current firearms licence and annual firearms accreditation.

[29] Mr Murphy stated in his email of 12 August 2018 that if he accepted a static guard role at Woolworths he would no longer possess a genuine reason to maintain his Category H Firearm License, and if his license was cancelled due to non-compliance with the Firearms Act 1996 this would affect his future job prospects. It was submitted by Mr Murphy that if his Category H Firearm License was cancelled, new rules have been introduced making it is more expensive and harder to re-secure. In Mr Murphy’s case he stated that his firearms licence expired in 2022. Potential employers prefer job applicants who have a current firearms licence.

[30] Mr Murphy submitted that his previous position was only 11km from the Southern Cross Depot at Wetherill Park, whereas the Level I position offered at Woolworths Bankstown was 30km from his Seven Hills residential address. This would result in additional cost for fuel, tolls and vehicle maintenance that he would not otherwise incur. Mr Murphy has a statutory entitlement to 8 week’s redundancy pay.

[31] In response to the further 5 November written submissions of the employer, the respondents provided a written response on 6 November 2018 addressing the issues of obtaining a firearms licence and travel time and also traversed some matters for which leave had not been provided to re-agitate following completion of the hearing.

Conclusion

[32] As stated above, the application by the employer is made pursuant to s.120(2) of the Act, which provides the Commission with discretion to reduce or remove an entitlement to the NES redundancy pay, should the Commission consider it appropriate.

[33] Section 120(2) of the Act is couched in the following terms:

“120(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.”

[34] Section 120(2) only applies where the terms of s.120(1) are met:

“120(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.”

(my underline)

[35] The statutory provision to enable a reduction in redundancy entitlements arises historically from a decision of a Full Bench of the Australian Conciliation and Arbitration Commission in the Termination, Change and Redundancy Case (the Redundancy Case).⁶ This case introduced a general severance pay entitlement under federal awards for employees whose employment was terminated on account of redundancy.

[36] In the Redundancy Case, employers submitted that it would not be appropriate, where alternative employment had been secured for the employee concerned, for the employee to then receive a redundancy benefit. The Full Bench stated:

“We do not wish to prevent an employer making an application to be exempted from the general prescription pursuant to this decision in cases where an employer obtains acceptable alternative employment for an employee but we would point out that, in our decision, severance payments are not made for the purpose of assisting employees to find alternative employment. Where such an application was made it would be important to consider whether previous service with the previous employer was recognized as service with the new employer. However, we would make it clear that we do not envisage severance payments being made in cases of succession, assignment or transmission of a business.”7

[37] Later in that case, the Full Bench considered the terms of an amendment to the Metal Industry Award 1984 that should be made to reflect its decision.⁸ The Full Bench ruled that the following provision should be included in the amendment to that award:

“An employer, in a particular redundancy case, may make application to the Commission to have the general severance pay prescription varied if he/she obtains acceptable alternative employment for an employee.”9

[38] Redundancy payments are intended to compensate for the loss of non-transferrable credits such as sick and long service leave as well as other entitlements based on length of service and the inconvenience and hardship imposed on employees, as discussed in the Redundancy Case.¹⁰

[39] It is a serious step for the Commission to make an order to limit or remove an employee’s statutory entitlements to redundancy pay. The employer must demonstrate that they have ‘obtained other acceptable employment’ for the employee concerned before the discretion provided in s.120(2) can be invoked.

[40] The Commission must determine whether the job offers made to the respondent employees constitutes obtaining other acceptable employment. The Full Court of the Federal Court in FBIS International Protective Services (Aunt) Pty Ltd v Maritime Union of Australia¹¹ stated that if an offer of alternative employment has been made by the employer, and the employee does not accept it, then the question turns to whether the offer was an acceptable one.

[41] There is no dispute that the employer made an alternative job offer to the employees in the sense that it ‘obtained’ for the employees other alternative employment, which they have declined.

[42] It is well established that the onus rests with the employer who seeks to activate the exemption from redundancy payment obligations¹² to its employees.

[43] To establish the acceptability of alternative employment, the test is an objective one, involving a consideration of matters such as hours of work, pay levels, recognition of previous service, fringe benefits, distance of travel to job, workload, job security and other matters.¹³

[44] There is no requirement that the new job offer be identical or broadly comparable with the redundant position. As SDP Watson stated in Felted Australia Pty Ltd v Textile, Clothing and Footwear Union of Australia: 14

“I accept the proposition advanced by Felted 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.”

[45] As similar finding was made in Spotless Services Australia Limited T/A Alliance Catering [2016]. 15 It is hardly likely that identical work will be able to be offered by the employer within its business when the role has become redundant.

[46] Further, VP Lawler stated in Datacom Systems Vic Pty Ltd v Raisa Khan; Siddhartha Desai: 16

“Other employment does not cease to be “acceptable” merely because it is on terms that are less advantageous to that of the terminating position. Tontine makes it clear that there are matters of degree involved.”

[47] The position of Security Guard Level 1 was offered to the employees following the loss of the armed security guard positions. The positions offered maintained the same rate of pay, including payment of the firearms allowance and was still in the security industry.

[48] On balance, I consider that the position of Level I Security Officer with the additional guarantees provided by the employer to be an acceptable employment offer.

[49] However, the factors raised by the respondent employees are relevant factors to be considered in terms of the discretion to be exercised in this application.

[50] In determining to exercise the discretion to reduce the employees’ NES redundancy entitlement, to nil, as claimed, I need to balance the conclusion that other acceptable employment was obtained against the matters raised by the employees which weigh for or against a reduction of their statutory redundancy entitlement.

[51] The employer has satisfied the Commission that in all the circumstances, the discretion available to reduce its legislative redundancy pay obligations to the listed employees should be exercised, however not to the extent claimed in respect of Messrs’ Murphy, Singh and Atta.

[52] I accept as a general proposition in respect to these employees given their evidence that the position of a Level I Static Guard is considered to be a demotion and does not advance their career in the security industry. Further, occupying such a position that no longer requires a firearms licence, and their licence either lapsing or being revoked on the basis there is no genuine employment reason to hold a firearms licence, raises a potential prejudice to their future job opportunities where a current firearms licence is required.

[53] However, this prejudice is much less than first put by the respondents as they appear to now accept that due to their past history of having held a firearms licence that under the existing legislation they would be allowed to apply to have their full Firearms Category H licence reissued. 17 The respondents submitted that if the relevant legislation changed it would be likely that having a firearms licence reissued would be made harder. In my view speculation on future legislative changes is not a matter the Commission should have regard to in this application.

[54] With respect to Mr Murphy, while I do not accept that the additional travel that would be required in the Level I position at Woolworths Bankstown makes the position ‘unacceptable’, it is a factor to consider in terms of the reduction of his redundancy entitlement. 18 I do accept that as the Level I position would no longer require Mr Murphy to exercise any technical, servicing or maintenance skills in respect to ATMs; this would be detrimental to his future career prospects in the industry.

[55] As to Messrs’ Singh and Atta, I consider the requirement to move from an Armed Guard position where they travelled in an employer supplied motor vehicle to various ATM locations, to having to stand for the entirety of a 9 hour shift (meal breaks excepted) is a factor that the Commission should consider. Both these employees have raised issues at the last minute regarding their physical capacity to undertake the Static Guard positions offered, and have not produced any medical evidence to support these positions. However, as a general proposition I accept that at least in respect to being 68 years and 65½ years of age, standing for 9 hours during a shift would create some physical difficulty. Based on the new physical requirements of the Level I positions offered it may have been preferable for the employer to have requested these employees to have undertaken a fitness for work assessment. However this does not appear to have occurred.

[56] On the basis of the above, I consider it an appropriate exercise of the Commission’s jurisdiction to reduce the redundancy entitlement of Messrs’ Murphy, Singh and Atta by half, to an entitlement of 4 weeks redundancy pay. As this is the extent of the Commission’s jurisdiction in a s.120 application, the actual calculation of what amounts to 4 weeks’ pay for the respondents’, should there be a dispute about this calculation, must be dealt with elsewhere.

[57] In respect to Mr Callaghan and Mr Grant, as they have not contested the employer’s application, and I have found that the positions they were offered as being acceptable and there being no evidence of their individual circumstances, the applications in respect to these two employees will be granted.

[58] An order will issue reflecting this decision.

DEPUTY PRESIDENT

Appearances:

Mr L Izzo for Southern Cross Group Services Pty Ltd

Mr A Atta, Mr B Murphy, Mr S Singh, Mr B Pavic on their own behalf

Mr Callaghan and Mr Grant no appearance

Hearing details:

2018

Sydney

29 October

Final written submissions:

Applicant

5 November

Respondents

6 November

Printed by authority of the Commonwealth Government Printer

<PR702288>

 1   15 August 2018

 2   Exhibit A1

 3   Written response of Mr Atta of 8 August 2018 at [3]

 4   R1

 5   Exhibit R2 email of 12 August 2018

6 (1984) 8 IR 34

7 Ibid at 75

8 (1984) 9 IR 115

9 Ibid at 135

10 Termination Change and Redundancy Case (1984) 8 IR 34; AIRC Print F6230 at p.50.

11 [2015] FCAFC 90

12 Clothing and Allied Trades Union v Hot Tuna (1988) 27 IR 226, Re Target Retail Agreement 2001, PR916204, 4 April 2002, at para 6

13 Ibid at 230-231

 14   PR974699 at [89]

 15   FWC 4820 at [65]

 16   [2013] FWC 1327 at [9]

 17   Respondents’ submissions 6 November 2018 at [2]

 18   See Australian Commercial Catering Pty Ltd v Powell and Togia [2016] FWCFB 5467 at 40] Spotless Services Australia Limited [2013] FWC 4484 at [20], RSEA Pty Ltd v Dexter Tuba-Ang [2015] FWC 5857 at 51]