DECISION

Fair Work Act 2009
s.120—Redundancy pay

The Trustee for the Luke and Nicole Zappelli Family Trust T/A Cool Breeze Clothing Pty Ltd Trading as Dimmeys
v
Wendy Wickstrom
(C2020/609)

Variation of redundancy pay.

[1] The Trustee for the Luke and Nicole Zappelli Family Trust T/A Cool Breeze Clothing Pty Ltd Trading as Dimmeys (Dimmeys) has made an application to the Fair Work Commission (the Commission) for a variation to the redundancy pay to be paid to Mrs Wendy Wickstrom.

[2] Mrs Wickstrom was first employed by Dimmeys as an Assistant Manager; and was later employed as a Store Manager at Dimmeys Sunshine store on weekdays and the Central West, Braybrook store on alternate weekends, with both stores located in the Melbourne metropolitan area. Mrs Wickstrom lives some distance from either store, however the distance between the two is accepted as being minor, around 4 kilometres.

Legislation

[3] The application is made pursuant to s.120 of the Fair Work Act 2009 (the Act) which provides the following:

“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.” 1

Background

[4] Mrs Wickstrom’s employment commenced with Dimmeys on 9 October 2017 and ended in February 2020. Mrs Wickstrom’s employment was for more than 2 years, but less than 3 years. Therefore, pursuant to the terms of the General Retail Award 2010 2 which applied to Mrs Wickstrom’s employment, she would otherwise be entitled to 6 weeks’ redundancy pay.

[5] Dimmeys seeks that Mrs Wickstrom’s redundancy pay be varied to nil for the reason that it obtained other acceptable employment for her, with it being proposed that her employment should be relocated from the Sunshine to Central West stores. It is not argued that Mrs Wickstrom’s contract of employment permitted Dimmey’s to unilaterally reassign her to another store.

[6] Mrs Wickstrom’s position as a Store Manager was worked on a two-week rotating roster. Week One was a 38-hour week over 5 days including Saturday and Sunday and Week Two was a 38-hour week over 4-5 days excluding Saturday and Sunday.

[7] At the time the application was filed in the Commission, Mrs Wickstrom was remunerated at the rate of $26.20 per hour plus applicable penalty rates and was classified as Retail Level 8 under the General Retail Award 2010.

[8] The position description of the Store Manager role included that she focus on achieving all sales, wages and shrinkage key performance indicators, she had responsibility for setting clearly defined goals and tasks for the team and following up on tasks until completion, creating rosters for staff 4 weeks ahead of time using the company’s rostering system, controlling store expenses, ensuring markdowns were actioned in an accurate and timely manner in accordance with company procedures, maintaining the stores cleanliness and tidiness and merchandising stock. 3

[9] Mrs Wickstrom was notified in early December 2019 that the Dimmeys Sunshine store would be closing in 90 days and was offered the option of accepting a redundancy or accepting an alternative position with Dimmeys.

[10] In her submissions, Mrs Wickstrom submits that when she was offered the alternative position in early December 2019, it was for the role of Assistant Manager at the Central West store and was for a job-share arrangement with another employee. She submits that in mid-January she was offered the alternative role as Store Manager at the Central West store.

[11] Dimmeys however submit the alternative position offered to Mrs Wickstrom was the position of Store Manager at the Central West, Braybrok store. They submit that the alternative position has the same hourly rate of pay and penalties, two-week rotating roster and position description as Mrs Wickstrom’s previous role.

[12] Mrs Wickstrom’s views about the alternative position of Store Manager at the Central West store include a reluctance to work with a particular employee of that store whom she alleges engages in bullying behaviour and her lack of faith in the company’s future. Her submissions on the subject are:

“My refusal of the position offered at the Dimmey’s Central West, Braybrook store was made because of my lack of faith and trust in the company. I have doubts about the security of employment within the company. This was not an easy decision for me to make, however my doubts about the future viability of Dimmey’s in the marketplace and their inability/unwillingness to provide adequate staffing numbers and resources such as cleaners to the remaining Dimmey’s stores along with my unhappiness with the company’s handling of my personal situation has convinced me that it is the right decision for me.” 4

Consideration

[13] The principles relating to the variation of redundancy pay for reason of an employer finding acceptable alternative employment are now well established, and have been summarised by Vice President Lawler in the following way:

“[8] In NUW v Tontine Fibres [2007] AIRCFB 1016 (Tontine) a Full Bench of the AIRC considered the meaning of the expression “acceptable alternative employment” in a redundancy provision in an enterprise agreement. It was common for enterprise agreements to reflect award provisions and contain redundancy entitlements that could be reduced if the employer obtained acceptable alternative employment (or some variant of that expression). The Full Bench observed:

“[23] It is well established... 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.”

[24] 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). ...”

[9] 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.” 5

[14] In the same matter, the Commission summarised the principles regarding redundancy entitlements and the provisions of the Act for a reduction to redundancy pay as follows:

“[22] Subsections 22(6) and (7) reinforce the notion that where there is a “transfer of employment” – a concept defined broadly in s.22(7) and present in this case –recognition of service with the outgoing employer by the incoming employer should disentitle the employee to the NES redundancy payment. That is consistent with the rational in the TCR No 1 Case and the Redundancy Case 2004 because where there is such recognition, there is no “loss of non-transferrable credits” of the sort that is one of the principal, if not primary, matters to which the redundancy entitlement in s.119 is directed.

[23] In summary:

•  The purpose of the redundancy entitlement conferred by s.119 is primarily to compensate the employee for loss of non-transferrable credits, especially long service leave.

•  It is not the intention of s.119 to fully compensate the employee in all or even most cases. The specified amounts are manifestly inadequate for that purpose.

•  The redundancy entitlement in s.119 has no “income maintenance” purpose and is not intended to address the requirement to search for another job and/or to tide over an employee during a period of unemployment albeit that the it should be regarded as having a minor component referable to the inconvenience and hardship associated with redundancy.

•  To the extent that alternative employment is “obtained” by the outgoing employer, matters referred to Tontine (obvious including elements such as the work being of like nature; the location being not unreasonably distant; the pay arrangements complying with award requirements) are relevant in assessing whether that employment is “acceptable” which is in turn relevant in assessing what, if any, reduction is appropriate. [Note that in Tontine, the alternative employment was with the same employer and there was no loss of continuity or non-transferrable credits. Nevertheless, the alternative employment, while assessed as “acceptable” still had material disadvantages that rendered it appropriate to award a portion of the entitlement.]

•  Where there is no continuity of employment or recognition of long service and other non-transferrable credits that were not paid out by the outgoing employer then the employer should be entitled to the majority of the s.119 entitlement. To the extent that the alternative employment is disadvantageous when compared to the previous employment that will also sound in lesser reduction than might otherwise have been the case.” 6

[15] I am satisfied on the materials before me that the alternative position offered to Mrs Wickstrom was of a similar nature to that of her position at the Sunshine store. Further, I am satisfied that the terms and conditions of the role offered are the same as her previous role and her length of service and entitlements would transfer to the new position. It is also conceded by Mrs Wickstrom that the employee at the Central West store with whom she did not wish to work has since resigned. A disadvantage of the alternative role is that it is a further 4 km for Mrs Wickstrom to travel to the Central West store compared to the Sunshine store. The employer submits this amounts to only an additional 8 minute drive. In the context of the distance already travelled each day by Mrs Wickstrom to get to and from work this is not an unreasonably distant new location. I have also considered but am not persuaded by Mrs Wickstrom’s concerns about Dimmey’s ongoing viability; to the extent that those concerns are reasonably held (and no material is before me on the subject) such concerns are not exacerbated through a change in employment location.

[16] As a result, I am not persuaded that a conclusion could be reached that the position offered to Mrs Wickstrom was not “other acceptable employment”.

[17] As such, I am satisfied that a reduction in the manner sought by Dimmeys is appropriate in Mrs Wickstrom’s case, and an order will be issued reducing the redundancy pay to which she is entitled to nil.

[18] An Order consistent with the foregoing will be issued at the same time as this Decision.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

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 1   Fair Work Act 2009 (Cth).

 2   MA000004, Clause 15; Redundancy pay is provided for in the NES. See sections 119–123 of the Fair Work Act 2009 (Cth).

 3   Submissions of Dimmeys, 26 February 2020.

 4   Submissions of Wendy Wickstrom, 5 March 2020.

 5   Datacom Systems Vic Pty Ltd v Rasiq Khan; Siddharth Desai [2013] FWC 1327, at [8] – [9].

 6   Ibid, at [22] – [23].