1
[2013] FWC 2578
DECISION
Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay
Football Queensland Ltd
v
Mr Paul Lonton
(C2013/2960)
DEPUTY PRESIDENT ASBURY BRISBANE, 1 MAY 2013
Application to vary redundancy pay for other employment - case law and principles re
exercise of discretion to reduce redundancy pay - whether employer obtained acceptable
alternative employment - Finding that there was no offer of employment capable of
acceptance or rejection by employee - Application refused.
Background
[1] This is an application under s.120 of the Fair Work Act 2009 (the Act) by Football
Queensland Ltd seeking an order to reduce the redundancy pay to which Mr Paul Lonton is
entitled. The grounds upon which the application is made are that:
Football Queensland Ltd is a not for profit organisation;
Football Queensland Ltd proactively sought assistance of other clubs to take over the
employment of staff who were affected by a restructure; and
Mr Lonton refused an offer of alternative employment, made by the Western Pride
Club.
[2] Directions were issued setting out the terms of s.120 of the Act and requiring that the
parties file submissions, witness statements or documents in support of, and in response to,
the application.
[3] A hearing was held on 5 April 2013. Football Queensland Ltd was represented by Mr
Geoffrey Robert Foster, Chief Executive Officer and Mr Lonton represented himself. Mr
Foster indicated at the hearing that Football Queensland Ltd relied on the ground in
s.120(b)(i) to assert that it had found other acceptable employment for Mr Lonton and did not
contend that it could not pay any amount of redundancy to which Mr Lonton is entitled, and
which this application seeks to have reduced.
[4] Both parties filed documentary material and submissions that were partly statements
albeit not in the form of witness statements. Mr Foster and Mr Lonton gave oral evidence and
were permitted to adopt their submissions as witness statements. I have considered all
material filed and tendered by the parties.
AUSTRALIA FAIR WORK AUSTRALIA
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Legislative Provisions
[5] By virtue of s.119 of the Act:
(1) An employee is entitled to be paid redundancy pay by the employer if the
employee’s employment is terminated:
(a) at the employer’s initiative because the employer no longer requires the job done
by the employee to be done by anyone, except where this is due to ordinary and
customary turnover of labour;
(b) because of the insolvency or bankruptcy of the employer.
[6] Section 120 of the Act provides as follows:
“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, FWA may determine that the amount of
redundancy pay is reduced to a specified amount (which may be nil) that FWA
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.”
[7] Section 120 of the Act is an avenue for the employer to apply to the Commission to
vary an obligation which would otherwise be imposed to make redundancy payments. That
section provides that FWA “may” determine to reduce the amount of redundancy pay up to an
amount which may be nil, indicating that the granting of full or partial relief from the
obligation is an exercise of discretion in the circumstances of the case. The employer bears
the onus of establishing that there are grounds justifying the exercise of the discretion
[8] The terms of s.120(1)(b)(i) were previously found in the standard award provision
established in the Termination, Change and Redundancy Case1. There have been a number of
cases where the operation of the provision and the meaning to be given to terms within it,
have been considered. In my view, the principles set out in those cases continue to be
relevant. In Re Clothing Trades Award (1982)(1) Appeals by Derole Nominees Pty Ltd and
ACM2 a Full Bench of the Australian Industrial Relations Commission said:
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“The Award provision does no more than provide an avenue by which an employer
may apply to the Commission to vary the obligation which would be otherwise
imposed by the award. It does not follow from the terms of the clause that an
employer coming within its scope will achieve necessarily full or partial relief. The
level of relief, if any, to apply in a given case, is a matter to be determined as an
exercise of discretion in the circumstances of that case.”3
[9] The Full Bench also observed that effort of a sufficient kind by an outgoing employer
may cause the obligation for redundancy pay to be reduced.4
[10] The meaning of the term “obtains” was derived by the Full Bench in that case from the
Shorter Oxford Dictionary (3rd Edition) as: “to procure or gain, as the result of purpose and
effort”. The Bench in adopting that definition noted that one employer is incapable at law of
effecting a contract of employment between an employee and another employer, and went on
to state that:
“The employer by purpose and effort may establish an opportunity which suits the
employee and which crystallises as alternative employment of an acceptable kind...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.”5
[11] In deciding whether to exercise discretion on the grounds that the employer has
obtained acceptable alternative employment, the Commission must be satisfied that the
employer took positive and proactive steps to obtain such employment, so that it can be said
that the employer is a “strong moving force”6 towards the creation of the opportunity for the
employee to gain alternative employment.
[12] The question of what constitutes “acceptable alternative employment” has also been
the subject of consideration in a number of cases, from which the following principles can be
distilled:
The onus lies on an employer seeking exemption from redundancy provisions to
establish that the alternative employment is acceptable;7
The term “acceptable” means that it is not “any” employment that will qualify;8
The test of whether alternative employment is acceptable is objective; 9
Although the test it objective, it is applied to individual employees and their particular
circumstances;10
The provision should not be interpreted so that employees have an unreasonable and
uncontrollable opportunity to reject the new employment in order to receive
redundancy pay; 11
[13] In determining whether alternative employment is objectively acceptable,
consideration is given to factors including: whether service with the previous employer is
recognised as service with the new employer;12 the work being of a like nature; the location
being not unreasonably distant; whether the pay arrangements comply with award
requirements;13 pay levels; hours of work; seniority; fringe benefits; workload and speed; job
security and other matters.14
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[14] It is also relevant to the assessment that redundancy payments are not made solely for
the purpose of assisting employees to find alternative employment. Redundancy payments
are intended to tide an employee over during the search for alternative employment, and to
compensate the employee for loss of credits for sick leave, long service leave and other
entitlements based on length of service.15
[15] The fact that an alternative position does not meet the personal preferences of an
employee, is not sufficient to establish that the position is not an acceptable alternative.
Where the employee does not co-operate with the employer in its efforts to obtain alternative
employment16, or where the employee refuses a position that is found to be acceptable on an
objective basis, the employee’s entitlement to redundancy payment may also be reduced.17
Facts
[16] Mr Lonton was employed by Football Queensland Limited as a Development Officer
from 1 June 2009 until 16 November 2012. In that role Mr Lonton was responsible for
travelling to various football clubs and assisting them with the development of players. Mr
Lonton did this by primarily interacting with coaches and advanced or “elite” players at those
clubs, to facilitate the networking of learning to players.
[17] Mr Lonton’s role was full time and he was paid a salary of $56,500 per annum which
included a base salary of $44,000 and a travel allowance of $12,500 to allow him to provide
and maintain a motor vehicle. Mr Lonton was based at Nathan, but primarily worked with
clubs in the Ipswich area.
[18] Prior to the decision to restructure its operations, Football Queensland Limited had 12
employees delivering coaching services. In or around May 2012, Football Queensland
decided to “outsource” its coaching services and to establish a model that engages with a
geographic area in the community through licensing of entities which would deliver those
services. Football Queensland Limited developed criteria to satisfy itself that the entities to
be licensed had the experience, financial capacity and skills to deliver the services. Football
Queensland Limited went out to the market and invited submissions from interested entities to
make applications for a license. Mr Foster said that the process evolved over time.
[19] Mr Foster met with all coaching staff on 27 May 2012 and advised them about the
change of direction. Mr Foster said that he also told coaching staff that Football Queensland
Limited would do whatever it could “within its persuasive powers” to have the existing
employees placed with the new licensees that would assume the role. Under cross-
examination from Mr Lonton, Mr Foster agreed that his opening statement at the meeting
with coaching staff on 27 May 2012 was: “I’m not going to sugar coat it. There will be
redundancies.” Mr Foster also agreed that Mr Lonton asked questions about when and how
the redundancies would take place and that he responded by saying that: “If an ‘APO’ club
does not pick you up, you will be made redundant”.
[20] Mr Foster said that Football Queensland Limited worked with new clubs to facilitate
them taking on current coaching staff in the positions of Technical Directors. This resulted in
6 employees being placed with newly licensed clubs and two employees being made
redundant. In the case of Mr Lonton, Football Queensland Limited had built an alliance with
a club called Western Pride, based at Ipswich. According to Mr Foster, Western Pride named
Mr Lonton as Technical Director in its application for a license, made in September 2012, and
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Football Queensland Limited believed it had an understanding with that Club that Mr Lonton
would be placed there as Technical Director.
[21] Mr Foster said that Western Pride could not make a formal offer in this regard to Mr
Lonton until it was given a license to participate in the league, and those licenses were not
issued until two-thirds of the way through January. Mr Foster also said that Football
Queensland Limited was responsible for issuing licenses to clubs, and required that persons
appointed to the positions of Technical Directors were approved by Football Queensland
Limited. There were a limited number of persons who were capable of filling that role. Mr
Lonton was qualified and known to Football Queensland Limited, and there would have been
no requirement for him to go through an approval or accreditation process to take up the
position with Western Pride. In relation to Mr Lonton taking up that position, Mr Foster said:
“To us it was presumed. Maybe that was wrong, but we presumed, that Mr Lonton
was going to fill that technical director vacancy, but as we’ve evidenced through
newspaper reports and website publications and that sort of thing, it was no secret in
the football community that Mr Lonton had been selected to take up that position.” 18
[22] There was material appended to the submissions of Football Queensland Limited
which appeared to be from a Western Pride website, stating that Mr Lonton was the Club’s
Technical Director and was engaged in various activities on behalf of Western Pride. There
was also an article in the Queensland Times naming Mr Lonton in that role. Mr Foster said
that there had been a delay in the issuing of licenses to the clubs, but the intention to place
coaching staff with the clubs was always there and well known.
[23] Mr Foster said that six other former coaching staff of Football Queensland Limited
were appointed to positions with new clubs as they obtained their licenses, in exactly the same
way as had been proposed with respect to Mr Lonton. Mr Foster also said that Football
Queensland Limited accepted Mr Lonton’s submission that no formal position had been
offered to him by Western Pride but maintained that Mr Lonton would have been appointed to
such a position, and in the meantime it had been proposed that he remain employed with
Football Queensland Limited until such time as an offer was made to him.
[24] Under cross-examination, Mr Foster agreed that clubs were advised in October 2012
as to who the successful licensees were, and that clubs other than Western Pride immediately
formalised their placement of staff and coaches. In response to the proposition that his
statement that nobody could move forward until 21 January 2013 was incorrect, and that other
clubs had employed coaching staff before that date, Mr Foster agreed that this had occurred
and said that it was a matter for those clubs.
[25] Mr Lonton said that at no time was he offered a position with Western Pride or
provided with any assistance by Football Queensland Limited to obtain such a position. Mr
Lonton also provided email correspondence between himself and Mr Todd Hunt, the Director
and Treasurer of Western Pride Football Club. The first email exchange occurred on 16
November 2012. Mr Lonton sent an email to Mr Hunt and a number of other persons, at 4.49
pm on that date, stating that he had been asked whether he had come to terms with Western
Pride regarding his position of Technical Director. The response from Mr Hunt at 5.01 pm on
that date, states that the Club would need confirmation in writing from Football Queensland
Limited that they are going to provide $40,000 to the Club to assist with that position on an
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on-going annual basis, and that if this is not in writing the Club will have difficulty
committing as it does not have a major sponsor.
[26] On Saturday 17 November 2012, Mr Lonton forwarded a further email to Mr Hunt
pointing out that no-one would undertake the job of Technical Director for $40,000, and that
there would need to be some additional payment to cover expenses. Mr Lonton also points
out that he is still employed by Football Queensland Limited and putting in the required hours
for that organisation, plus performing tasks for Western Pride at no cost. Mr Lonton
concludes by stating that he needs to know what he is working towards.19 The response from
Mr Hunt to Mr Lonton’s email is in the following terms:
“In my mind, what you are working towards is a fulltime role as [Western] Pride’s
T[echnical] D[irector]. I am black and white mate no grey - so I would like to see
something in writing that commits F[ootball] Q[ueensland] to the $40K
contribution...
Nobody can doubt the time and effort you have personally put into this venture,
especially noting your fulltime role with F[ootball] Q[ueensland].
Hang-in there Paul, there are certainly no hidden agendas. It really is simply about
how we fund you in a position that will certainly be more than $40K a year. I don’t
think any of us would disagree that this would not cover the costs of your role, travel,
incidentals and our expectations of your performance as the TD...”20
[27] Mr Lonton went on an extended period of sick leave on 22 November 2012. Mr
Lonton said that he was suffering from depression, anxiety and stress and that uncertainty
about his future employment contributed to this condition. On 9 January 2013, Mr Lonton
corresponded with Mr Foster by email, in the following terms:
“Having now had some time to deal with and better understand my illness, I believe
that it will be both unrealistic and inappropriate for me to take up the proposed
position with Western Pride. Notwithstanding the fact that no terms have been
offered to me. This has been a very difficult decision to reach but I believe that it
the right and honourable thing to do. [sic] I am more than happy to discuss this with
you and will be happy to meet with you at your convenience. I am prepared to advise
Pride of my decision but I will wait until I receive your response. At this stage I am
due to be reassessed on the 23rd January and I am confident that I will be fit to return
to work at that time.”
[28] Mr Foster responded indicating that Football Queensland Limited had advised
Western Pride of Mr Lonton’s decision and that he would talk to Mr Lonton when he returned
to work. Mr Lonton tendered a medical certificate from a Clinical Psychologist dated 24
January 2013, stating that he had presented for treatment on 7 November 2012 experiencing a
moderate level of depression, a severe level of anxiety and an extremely severe level of stress.
The certificate goes on to record that he has been attending treatment sessions and it is
recommended that he continue to do so, but that Mr Lonton is capable of returning to work.
[29] Mr Lonton returned to work on 23 January 2013 and his employment was terminated
on 4 February 2013, with payment being made to him of five weeks wages in lieu of notice.
Mr Lonton said that Western Pride did not, at any time, offer him any financial terms, and
[2013] FWC 2578
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there was no alternative position for him to accept or reject. Mr Lonton said that in addition
to the lack of a firm offer, he was also concerned about the financial viability of Western
Pride. Under cross-examination, Mr Lonton said that he was in a position to make an
assessment of the financial viability of Western Pride, because he assisted the Club to
facilitate their application for a licence and attended meetings where financial matters
including the lack of a major sponsor were discussed.
[30] In response to the proposition that he was happy for his name to be included on the
licence application submitted by Western Pride, Mr Lonton said this was to assist the Club to
obtain a licence and was not an offer of employment. Mr Lonton maintained that he is
entitled to be paid redundancy payments.
Conclusions
[31] It is not in dispute that Mr Lonton’s position with Football Queensland Limited has
been made redundant. Neither party provided any direct evidence about the length of Mr
Lonton’s service. Somewhat confusingly, Mr Lonton provided an employment separation
certificate for another employee of Football Queensland Limited. In cross-examination Mr
Foster put the proposition to Mr Lonton that they had worked together for six years. Mr
Lonton did not disagree with that proposition. Accordingly, I have assumed that Mr Lonton
has six years but less than seven years service, and but for an Order under s.120 of the Act, is
entitled to a redundancy payment of 11 weeks wages.
[32] In my view, this is not a case where the discretion to set aside some or all of the
redundancy payments to which Mr Lonton is entitled should be exercised. As the applicant,
Football Queensland Limited carried the onus of establishing that other acceptable alternative
employment was obtained for Mr Lonton. In my view the Company failed to meet this onus
and make out its case.
[33] While I accept that Football Queensland Limited went to some effort to arrange an
alternative position for Mr Lonton with one of the licensees in its restructured arrangement,
there was no position offered to Mr Lonton such that it could be said that Football Queensland
Limited obtained other acceptable employment for him.
[34] There was no offer of terms and conditions of employment to Mr Lonton such that
any comparison to his former position could be undertaken to determine whether the position
was an acceptable alternative. There was also no evidence of any consideration being given
to recognition of Mr Lonton’s service and accrued entitlements. The fact that Mr Lonton
allowed his name to appear on an application for a licence did not constitute an offer of
employment by Western Pride capable of refusal by Mr Lonton.
[35] The question of whether Mr Lonton has unreasonably refused an offer of alternative
employment does not arise, because Mr Lonton has received no such offer. By his letter of 9
January 2013 Mr Lonton advised Football Queensland Limited that no terms had been offered
to him by Western Pride and that he no longer wished to take up any position that Western
Pride may offer him. Football Queensland Limited then proceeded to terminate Mr Lonton’s
employment in circumstances where it no longer required his job to be done by anyone, and
this was not due to the ordinary and customary turnover of labour.
[2013] FWC 2578
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[36] In those circumstances, the application by Football Queensland for a reduction in the
redundancy payments to which Mr Lonton is entitled is dismissed. Mr Lonton is entitled to
be paid the full redundancy amount owing to him which, for the reasons set out above, is
assumed to be an amount of 11 weeks at his weekly wage rate of $1,086.54 totalling
$11,951.94. In the event that the parties do not agree on the amount of redundancy payable to
Mr Lonton, they are to notify my Associate within seven days of the date of release of this
Decision and the matter will be re-listed.
DEPUTY PRESIDENT
Appearances:
Mr G. R. Foster on behalf of Football Queensland Limited.
Mr P. Lonton on his own behalf.
Hearing details:
2013.
Brisbane:
April 5.
Printed by authority of the Commonwealth Government Printer
Price code C, PR536057
1 Amalgamated Metals, Foundry and Shipwrights Union v Broken Hill Pty Co Ltd, Whyalla (Termination, Change and
Redundancy Case) (1984) 8 IR 34, Whyalla Termination, Change and Redundancy Case); Print F6230.
2 (1990) 140 IR 123
3 Re Clothing Trades Award (1982)(1) Appeals by Derole Nominees Pty Ltd and The Australian Chamber of Manufactures
(1990) 140 IR 123 at 126.
4 Ibid p. 129.
5 Derole op.cit. (1990) 140 IR 123 at 126.
6 Derole op.cit. (1990) 140 IR 123 at 128.
7 Clothing and Allied Trades Union v Hot Tuna (1998) 27 IR 226 at 231.
8 Derole op.cit. at 128.
9 Derole op.cit. (1990) 140 IR 123 at 128; Clothing and Allied Trades Union v Hot Tuna (1998) 27 IR 226 at 230-231.
10 Derole op.cit. (1990) 140 IR 123 at 129 - 130.
11 Ibid p. 128.
12 Amalgamated Metals, Foundry and Shipwrights Union v Broken Hill Pty Co Ltd, Whyalla (Termination, Change and
Redundancy Case) (1984) 8 IR 34 at 75, Whyalla Termination, Change and Redundancy Case); Print F6230 at 48.
13 Re Clothing Trades Award (1982)(1) Appeals by Derole Nominees Pty Ltd and The Australian Chamber of Manufactures
(1990) 140 IR 123 at 128.
[2013] FWC 2578
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14 Clothing and Allied Trades Union v Hot Tuna (1998) 27 IR 226Ibid at 230-231.
15 Termination, Change and Redundancy Case op.cit. (1984) 8 IR 34 at 75.
16 Re Algray Pty Ltd AIRC Print H7232 [C037] 6 March 1989 per Merriman C cited in Derole op.cit. at 129.
17 Derole op.cit. at 129.
18 Transcript PN 84.
19 Appendix 1 to Mr Lonton’s Submission/Statement.
20 Appendix 2 to Mr Lonton’s Submission/Statement.
