1
Fair Work Act 2009
s.120—Redundancy pay
FBIS International Protective Services (Aust) Pty Ltd
(C2013/7271)
COMMISSIONER GREGORY MELBOURNE, 20 MAY 2014
Variation of redundancy pay.
Introduction
[1] FBIS International Protective Services (Aust) Pty Ltd (FBIS) have had a long-standing
contract to provide security services to Asciano Executive Services Pty Ltd at various
locations in different States of Australia. However, in late 2013 it was not successful in re-
tendering for the contract and ceased providing services to Asciano on 31 October 2013. The
new contractor, ACG National Pty Ltd (ACG), commenced in its place on the following day.
[2] FBIS employed 70 full-time employees on the Asciano contract as at 31 October 2013.
Eleven of those employees were subsequently offered other work with FBIS. Another four
were unable to find work with FBIS, or the new contractor, and were made redundant and
paid their full redundancy entitlements by FBIS. The remaining employees were employed by
the new contractor, ACG, on what FBIS submits are essentially the same duties, carried out at
the same locations, with similar entitlements as applied previously.
[3] Section 119 of the Fair Work Act 2009 (the Act) provides an entitlement to
redundancy pay, based on a scale of payments set out in the section. However, s.120 of the
Act enables an application to be made to have that obligation varied. It states:
“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.
[2014] FWC 1922 [Note: An appeal pursuant to s.604 (C2014/4854) was
lodged against this decision - refer to Full Bench decision dated 21 October
2014 [[2014] FWCFB 6737] for result of appeal.]
DECISION
E AUSTRALIA FairWork Commission
https://www.fwc.gov.au/documents/decisionssigned/html/2014FWCFB6737.htm
[2014] FWC 1922
2
(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.”i
[4] FBIS has accordingly made application under s.120 seeking an order “...for a
reduction in its obligations to make redundancy payments to various employees consequent
upon the loss of its contract to provide security services to Asciano Executive Services Pty
Ltd”ii because it has obtained “other acceptable employment”iii for those employees.
[5] However, it also raises a threshold issue about whether an application under s.120 is
even necessary. It argues that because of the particular “change of contract” provisions in the
Security Services Industry Award 2010, established under s.121(2) of the Act, no entitlement
to redundancy payments in s.119 exists in this case.
[6] All of the employees named as Respondent’s to the application were notified by the
Commission, and given the opportunity to appear in the proceedings. None of the employees
elected to take up this opportunity. However, the Commission received five written
submissions from employees. Three submissions were received from Mr Graham Crampton
on various dates, (4 and 31 December 2013 and 24 January 2014), indicating they were also
made on behalf of five other employees. A further written submission was received from Ms
Denise Pickering on 3 February 2014. Five Brisbane based employees also provided a written
submission on 3 February 2014. Each of these submissions from the various employees
opposed the application.
[7] FBIS was represented by Mr Rohan Millar of Counsel who was granted leave to
appear under s.596(2)(a) of the Act.
The Issues to be Determined
[8] There are various issues to be determined in this matter:
1. The “threshold” issue – do the employees have an entitlement under s.119, or has
that entitlement been extinguished by the combined operation of s.121 of the Act and
sub clause 12.5 of the Security Services Industry Award 2010?
2. If an entitlement does exist under s.119 has FBIS obtained “other acceptable
employment for the employees” as provided for by s.120(1)(b)(i) of the Act?
3. If so, is it appropriate to reduce the redundancy pay entitlement otherwise due to
those employees?
4. If it is appropriate to reduce the amount what should that “reduced amount” be?
The Evidence and Submissions
[9] As indicated, FBIS raises an initial threshold issue about whether, in the present
circumstances, an application under s.120 is even necessary. It does so because it submits
[2014] FWC 1922
3
before an order under s.120 can have application there must first be an entitlement to
redundancy payments under s.119. It questions whether that entitlement exists in this case. In
support it refers, firstly, to s.121 of the Act which allows a Modern Award to limit the
entitlement to severance pay arising under the National Employment Standards (NES). It
submits a Full Bench of the Commission decided such a limitation should be included in the
Security Services Industry Award 2010 when it inserted the “change of contract” provisions in
sub clause 12.5 of the Award. The sub clause states:
“(a) This clause applies in addition to clause 8 - Consultation of this award and
s.120(1)(b)(i) of the Act, and applies on the change to the contractor who provides
security services to a particular client from one security contractor (the outgoing
contractor) to another (the incoming contractor).
(b) Section 119 of the Act does not apply to an employee of the outgoing contractor
where:
(i) the employee of the outgoing contractor agrees to other acceptable
employment with the incoming contractor; and
(ii) the outgoing contractor has paid to the employee all of the employee’s
accrued statutory and award entitlements on termination of the employee’s
employment.
(c) To avoid doubt, s.119 of the Act does apply to an employee of an outgoing
contractor where the employee is not offered acceptable employment with either the
outgoing contractor or the incoming contractor.”iv
[10] FBIS submits both sub paragraphs (i) and (ii) above apply in the circumstances and
therefore there is no redundancy pay obligation. It also submits that although the Award does
not apply to the employees during the term of the existing Enterprise Agreement its
application does not deal with entitlements arising under the Award. An application under
s.120 is instead dealing with the NES entitlements contained in s.119. That entitlement in the
security industry has been limited under s.121(2) of the Act by means of the sub clause now
contained in the Security Services Industry Award 2010.
[11] It submits:
“It's on that basis that the Full Bench has seen fit to include in the Security Industry
Award a provision disentitling an employee to redundancy pay upon a change of
contract.”v
And further:
“We're relying upon the limited scope of the NES under section 119 in relation to the
present employees and that entitlement under the NES is limited because it doesn't
apply in situations of changes of contract.”vi
[12] It further submits this is “precisely what was contemplated by the Full Bench in
making the award exclusion from the NES in those terms,”vii and therefore, “these employees
are not redundant in any meaningful sense and should not be entitled to what's effectively a
[2014] FWC 1922
4
windfall gain by way of a redundancy payment when in reality they're continuing on in
employment.”viii
[13] FBIS also refers to the decision of Commissioner Spencer in ISS Facility Services
Australia Limitedix in support of its submission. It also dealt with a change of contract
situation, on this occasion in the cleaning industry, and an application under s.120. FBIS
referred, firstly, to the Commissioner’s statement at [42] in the following terms:
“By operation of s.121(2) of the Act a Modern Award may include a term specifying
situations, above and beyond s.121, which limit the operation of s.119 to the
termination of an employee’s employment.”x
[14] It then refers to the Commissioner’s finding at paragraphs [49] and [50] where she
states:
“The Respondent was a part-time employee both prior to redundancy and subsequently.
The other terms of the employment; location and duties, are the same as is the
remuneration rate. Only the hours vary but this situation may change by agreement
between the Applicant and the Respondent.
The alternative employment, when viewed as a whole, is deemed to be acceptable and
accordingly, as clause 14.5(b)(i) and (ii) of the Award are met, clause 14.5(c) is
therefore invoked. That is, s.119 of the Act does not apply and the payment of
redundancy is not applicable as the Respondent has been offered acceptable
employment (although only half the income will be received) with the incoming
contractor.”xi
[15] FBIS submits clause 14.5 in the Cleaning Industry Award is in the same terms as the
Award sub clause in the present matter and Commissioner Spencer accordingly found no
entitlement to redundancy pay exists. It submits “the same analysis should be pursued here
and by reason of section 121(2) of the Act no entitlement under the NES arises.”xii
[16] In response to a question from the Commission FBIS acknowledged the circumstances
before Commissioner Spencer can be distinguished because in that matter there was no
Enterprise Agreement in place. However, it submitted in response:
“Correct. It was purely a matter of applying the award provision and if we didn't have
the EBA in this case, this would be, in my submission, a very straightforward
application. The EBA adds a gloss of complexity to it and in fact in terms of the
application of the change-of-contract clause in the award the starting point is that the
award is not applicable to the employment. I say that there is a limitation on the way
that the NES can be said to apply in these circumstances because the award has limited
the NES and the fact that the award doesn't apply to this employment during the life of
the collective agreement doesn't effectively revive the NES in its full unconditional
terms. It remains limited to not apply in situations of change of contract.”xiii
[17] FBIS submits, in summary, that the National Employment Standards have been
limited in their operation in the security industry by the combined operation of s.121(2) of the
Act and sub clause 12.5 of the Award. There is therefore no entitlement to redundancy pay
under the National Employment Standards in the current circumstances.
[2014] FWC 1922
5
[18] FBIS made further submissions in support of its application under s.120 in the event
its threshold submission was not determined in its favour. It submits the Commission has a
broad discretion under s.120 and, in this case, the entitlement should be reduced to zero. It
referred to three grounds, in particular, in support of this outcome.
[19] Firstly, it submits the requirements of s. 120(1)(b)(i) of the Act are made out on the
facts. It submits it obtained alternative employment for the employees and played an active
role in achieving this outcome.
[20] Mr Jarrod Christmas is employed by FBIS as its National Operations Manager. He
detailed a series of discussions that took place with ACG representatives about the future
engagement of existing FBIS employees. He provided details to ACG about those employees
who agreed to allow FBIS to pass on their contact details. He also gave information about the
requirements and arrangements associated with the existing FBIS Enterprise Agreement. He
also indicated the employees were paid their wages up to and including 31 October 2013 by
FBIS, together with all accrued leave entitlements in the following pay period. However, he
believed one employee, Ms Denise Pickering, had been taken on by ACG in a lesser role. She
had been employed by FBIS as a Supervisor with responsibility for four different sites,
however, he understood she was now being employed by ACG in the classification of Senior
Guard at a lower salary level.
[21] FBIS also submits the new employment constitutes “acceptable” employment. While
conceding this is to be objectively determined the employees have taken up the job offers
made to them by the new contractor. It also submits the nature of the work, the work
locations, and the pay and conditions are essentially unchanged. The employees are
effectively continuing in the same jobs, albeit with a different employer.
[22] It also submits that in determining what is “acceptable alternative employment” the
Commission is not required to apply a “better off overall” test standard. The test instead
requires a comparison between the current employment arrangements and what existed
previously. In this context it referred to the often cited Full Bench decision in Australian
Chamber of Manufacturers v Derole Nomineesxiv (Derole Nominees) which held:
“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.”xv
[23] It also made reference to the decision in National Union of Workers v Tontine Fibresxvi
(Tontine) where the Full Bench stated (references omitted):
[2014] FWC 1922
6
“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). It is
also quite clear from the text of the provision that the Commission may remove the
employer’s severance benefit obligations completely or may simply reduce them.”xvii
[24] FBIS submits this is “a textbook example of what must by its very concept be
acceptable alternative employment” with the employees “...suffering no detriment in the
change that's been undertaken here.”xviii However, it acknowledged the employees have
suffered some detriment through the loss of accrued entitlement to personal leave and the
imposition of a qualifying or probationary period on commencement with the new contractor.
They are also being viewed as new employees, rather than employees with a continuous
period of service. This would have an impact, for example, in regard to long service leave
accruals. It also acknowledged one employee, Ms Denise Pickering, appeared to be employed
in a different role with the new contractor and acknowledged in her case there could be
grounds for a separate order to be made, although this was not its primary position.
[25] The second reason put forward by FBIS in support of its application is that the
employees are not truly redundant and continue to perform the same jobs, with only the
identity of the employer having changed. It referred to the decision of the High Court in
Amcor Limited v Construction, Forestry, Mining and Energy Unionxix in support of this
submission.
[26] It finally made reference to the “Change of contract” clause in the Security Services
Industry Award 2010, included by a Full Bench of the Commission, which recognised “a
change of contract with the incoming contractor taking over some or all of the relevant staff
of the outgoing contractor is a common occurrence in the security industry.”xx It submits it
would be anomalous in the present situation to require payment of redundancy pay in
circumstances where the Full Bench has recognised that such payments are not required to be
made under the Award.
[27] As indicated, the Commission received five written submissions from the various
Respondent’s. Three were received from Mr Graham Crampton; one from Ms Denise
Pickering, and another from five Brisbane based employees, namely Matthew Barber, Nicolas
Giffen, Ronald Kent Griffith, Malcolm Graham Predl and Nicolas Soter.
[28] Mr Graham Crampton filed submissions on his own behalf and on behalf of
employees at the Ingleburn site, namely himself, Mr Kim Wong, Mr Eric Reedman, Ms
Michelle Smith, Mr Rodney Holden, and Mr Syed Zaidi.
[29] The first submission was received from Mr Crampton on 4 December 2013. It submits
the employees feel “cheated” out of their entitlements as they were required to apply for a job
with ACG by sending in resumes and attending interviews. He submits all FBIS did was to
provide their telephone contact details to ACG. He also submits the Respondent’s
entitlements were not carried over from FBIS to ACG, and all employees were placed on a six
month probationary period with ACG. He also submits the employees who attended the
interviews with ACG, but were not successful in gaining a position, were paid out their
[2014] FWC 1922
7
redundancy entitlements and this is “discriminating” treatment against those who accepted
positions with the new employer.xxi
[30] The submission also highlights concerns about the six month probationary period
imposed by ACG and submits this could create a situation where employees are “missing out
twice” if terminated during this period.xxii
[31] The second submission received from Mr Crampton was sent in response to the
directions issued by the Commission and received on 31 December 2013. It contained a
“group submission” document from the above named employees at Ingleburn, as well as a
personal statement from Mr Crampton.
[32] The group submission states:
“If FBIS said they got us the job and was negotiating with ACG, then why did they send
everyone an urgent email on the last day we were employed with them on 31 October
2013 asking if we were employed by ACG and to send our contracts to them? FBIS
should have known this if they got us the job.”xxiii
[33] It submits that as the employees were required to apply for positions and attend an
interview they do not believe FBIS had any hand in obtaining alternative employment for the
Respondents.
[34] Mr Crampton also submitted a witness statement. However, this was not formally
entered into evidence at the hearing as Mr Crampton did not attend. He states he was
employed by FBIS for over 12 years and further:
“FBIS say nothing has changed well; I don’t receive a 3% rise each year with the new
company or vote on a new agreement as I did with FBIS, I was a supervisor with FBIS
up until 31/10/13, I was not employed as a supervisor with the new company ACG I
was employed only as a guard, I was also informed by our new manager in ACG prior
to commencement that on our site there were no supervisors or senior guards that
means I others didn’t retain the same position we held with FBIS. I and Kim Wong
both negotiated a higher position after the 01/11/13, so how can everything be the
same.”xxiv
[35] Mr Crampton also submits:
“I have been a security guard on this same site at Ingleburn for over 12 years and with
Asciano/Patricks for over 16 years and have now been working for 3 different security
companies on this Ingleburn site. The first company I worked for finished in 2001 and
I went straight to the site to apply for a job with FBIS, I received that job, and I was
doing the same job as I was with the prior company except my position changed from
higher position as supervisor back to a guard. That prior company ended up paying
me redundancy because there was no other position for me in there company
(sic). When starting with FBIS I was doing the same job as I was with the prior
company.
In both situation, commencing with FBIS and now commencing with ACG, I had to
apply for the position, I had to send in a resume, I had to attend an Interview otherwise
[2014] FWC 1922
8
I would not have received a position in any of those companies, there would be only
one difference, I had to sign a release form for FBIS to release my personal details
because FBIS managers would not allow us to contact the new company ourselves and
they would not release the new company name to us, that way they can use this section
120 and there agreement clause (sic), FBIS management had this all worked out.”xxv
[36] The third and final submission from Mr Crampton was received on 24 January 2014 in
response to the submissions from FBIS. He submits FBIS had a responsibility to notify the
employees that the contract with Asciano was coming to an end within 28 days, as per the
Agreement, and this was not done. He questions why employees weren’t asked about
redeployment and says he discussed this with Steve Bitschkat, a Regional Manager at FBIS.
Mr Crampton attaches an email from Mr Christmas to Mr Bruce Tresider, and points to a
particular paragraph which states:
“FBIS will likely be required to pay redundancies to all employees who are terminated
from employment and not offered acceptable alternative employment with ACG
during the transition. For an offer from ACG to constitute acceptable alternative
employment, the employee’s continuity of service needs to be recognised by ACG
including all leave liabilities.”xxvi
[37] The second group of employees to file submissions in this matter, Mr Matthew Barber,
Mr Nicolas Giffen, Mr Ronald Kent Griffith, Mr Malcolm Graham Predl and Mr Nicolas
Soter, are Brisbane based. They did not attend the hearing either. In their written submissions,
the group states that:
“...the applicant did not obtain acceptable employment on our behalf. To obtain
employment with the new provider we were all required to submit applications and
attend interviews. These interviews were not facilitated by FBIS and at any time the
new provider could have replaced all staff with other staff of their own.”xxvii
[38] In relation to the efforts of FBIS to obtain the alternative employment the group states:
“All meetings, phone calls, facilitation and correspondence for obtaining employment
with the new company were undertaken by us, with no assistance from FBIS. Most of
our efforts to contact FBIS during the transition period went unanswered. Any efforts
by FBIS to enter into an agreement with ACG regarding continuity of service are
considered to not be of an appropriate level. FBIS has also not provided any evidence
to show that the Respondent’s individual employment contracts were forwarded across
to ACG for their perusal.”xxviii
[39] In relation to which instrument should cover the employees they state that:
“FBIS does not operate under the Security Services Industry Award (the Security
Award). FBIS has chosen to operate under the FBIS International Protective Services
(Aust) Collective Agreement 2012-2016. As such the component of the Security
Award quoted does not apply to our situation. If the Commission believes that this
clause is applicable, Clause 12.5(b)(ii) would require FBIS to pay all of our accrued
statutory and award entitlements on termination of our employment.”xxix
[2014] FWC 1922
9
[40] Ms Denise Pickering was the final employee to file a submission in this matter. She
submitted a brief statement, but again did not attend the hearing. The statement outlined her
situation and submits her take home pay has been reduced by $967 per fortnight. In relation to
the process undertaken she stated:
“I was asked by FBIS to write a letter saying I give them permission to pass my details
on to ACG National. FBIS International did do this. I was contacted by ACG National
and asked if I was interested in obtaining a position with them, I said yes, I was then
told I would have to attend an interview and go through the process of applying for a
job with ACG National like everyone else just because I already worked at the site or
was the current supervisor does not mean I am guaranteed a job. I would have to apply
and then be considered.
I went through the process of applying for a job with ACG; I was told they were going
to offer me a position if I was interested. ACG would not tell me what position I was
been offered only that it was a full time position at Dapto.
It wasn’t until I attended the company induction and signed my employment letter
from ACG that I was told by Martyn Howard that I would not be retained as
supervisor at Patrick Autocare at Dapto and that I was been demoted back to a
guard.”xxx
[41] As indicated, the Applicant has noted Ms Pickering’s situation differs from that of
other employees now employed by ACG. It stated:
“...I would readily acknowledge that there would be sufficient basis for a separate order
to be made in relation to Ms Pickering if, Commissioner, you were of the view that
Ms Pickering's case compelled some different conclusion. There's sufficient basis for
that.
The primary submission is that she's in the same position as everyone else. She's gone
to new employment which in any view is acceptable alternative employment. It would
be in some ways an unhappy analysis to start differentiating between employees.
Having said that, her case is more compelling than the others because she has been
able to say, ‘Look, I've lost as a result of this,’ and that does provide a basis for her to
be viewed differently. I wouldn't urge that outcome upon you, Commissioner, but
were you to reach that view, I would readily acknowledge it would be open to you.”xxxi
Consideration
[42] The circumstances associated with a new employer taking over a contract when the
existing contractor is unsuccessful in re-tendering for that contract are obviously significant,
and create a situation that is potentially disruptive and uncertain for the employees involved.
The evidence also indicates that for some long-standing employees this was not the first time
that they have been confronted with this situation. However, at the same time these
circumstances are not unusual in the security services industry, and consequently there are
provisions in place that relieve an employer of the obligation to make redundancy payments
where the employer “obtains acceptable alternative employment” for the employees.
[2014] FWC 1922
10
[43] As indicated, at the outset several issues potentially arise for determination. The first
concerns the “threshold” issue raised by the Applicant. Do the employees have an entitlement
under s.119 to redundancy payments, or has that entitlement been extinguished by the
combined operation of s.21 of the Act and sub clause 12.5 of the Security Services Industry
Award 2010?
[44] The Applicant’s submissions in support have been set out in some detail and are not
re-stated now. I have also had regard to the decision of Commissioner Spencer in ISS that is
referred to by FBIS, and her finding that because of the change of contractor provisions in the
Award s.119 of the Act does not apply to employees covered by the Award in change of
contract situations. Therefore, as there is no entitlement under s.119 there can be no order to
reduce that entitlement under s.120.
[45] However, there is one important distinction between the circumstances in that matter,
which is of particular relevance. FBIS is covered by an Enterprise Agreement, rather than a
Modern Award as was the case in the matter before Commissioner Spencer. Clause 1.5.1 of
that Agreement, the FBIS International Protective Services (Aust) Pty Ltd Collective
Agreement 2012 - 2016xxxii, also provides that the Agreement operates in place of “any other
award or collective agreement.”
[46] The existence of an Enterprise Agreement in this case, instead of an Award, means
s.121(3) of the Act must also be considered. It states:
“(3) If a modern award that is in operation includes such a term (the award term), an
enterprise agreement may:
(a) incorporate the award term by reference (and as in force from time to time)
into the enterprise agreement; and
(b) provide that the incorporated term covers some or all of the employees who
are also covered by the award term.”xxxiii
[47] I am satisfied the requirements of section 121(3) mean the threshold argument put by
FBIS fails. Section 121(3) provides that if a modern award includes “other exceptions” to the
obligations contained in s.119 an Enterprise Agreement may incorporate the Award term.
However, it continues to indicate it must do so “by reference” and indicate which employees
are intended to be covered in this way. I am satisfied this requires that express reference to
these matters must be included in the Agreement. I can find no such reference in the
Agreement that covers FBIS and therefore am not able to conclude the requirements in
s.121(3) have been satisfied. It therefore follows that the Agreement is not limited in regard to
the operation of s.119 in the same way as the Award in the matter before Commissioner
Spencer, and therefore the threshold argument fails.
[48] I now turn to consider whether an order should be made under s.120 and, if so, in what
terms. I am satisfied, firstly, that FBIS has satisfied the requirement in s.120(1)(b) that it
“obtains” other employment for the employees. In coming to this conclusion I have noted the
submissions and evidence of Mr Crampton that the employees themselves did most of the
work to obtain employment with the new contractor. He also submits they were still required
to be interviewed before being engaged and were then subject to an initial probationary
period. However, the evidence of Mr Christmas indicates there was a significant degree of
[2014] FWC 1922
11
contact, and in some cases negotiation, with the new contractor about engaging the
employees, and on what terms. The employees were likely not aware of the extent of these
discussions and the various proposals being canvassed. I am also satisfied that there is nothing
unusual for the employees to be interviewed before being engaged, even in this change of
contractor situation, and there are good reasons why this would occur. For example, it would
be unusual if the employees were simply taken on by the new contractor “sight unseen.” The
establishment of an initial probationary period, while likely to be an extra source of
uncertainty for the employees at an already uncertain time, is also likely to be part of the new
contractor’s normal employment practices. There is also no evidence that any employee was
put off during this probationary period.
[49] The question of what is required by the word “obtains” was considered by the Full
Bench in Derole Nominees. It indicated, firstly, it cannot mean obtain “in the fullest sense
possible” because one employer is incapable of effecting a contract of employment with its
employees and another employer, and the word must be given “some lesser meaning.” It
concluded:
“Viewed in this way it will be seen that the intention is not to impose an absolute test on
the employer’s ability to “obtain” alternative employment but rather 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.”xxxiv
[50] In Datacom Systems Vic Pty Ltd v Rasiq Khan; Siddharth Desaixxxv (Datacom) Vice
President Lawler also expressed the view that the word “obtains” in the context of s.120
should be given a very broad interpretation. I am satisfied that the evidence of Mr Christmas,
in particular, indicates FBIS has done enough in all the circumstances to “obtain” alternative
employment for the employees.
[51] The tests to be applied in determining what is “acceptable alternative employment” are
also well established. It is, firstly, a test that is to be applied objectively. “Acceptable” means
that it must meet the relevant standard. The decision in Derole Nominees indicates that the
work being of a like nature, the location, pay arrangements, hours of work, seniority, fringe
benefits, workload and job security are all relevant considerations in this context.
[52] The onus of establishing that the alternative is acceptable also rests with the employer,
and the Commission may remove a redundancy benefit obligation entirely, or may instead
reduce it.xxxvi I am also satisfied that it does not require the new employment to be identical,
or for it to be broadly comparable. In this context I note the statement of Senior Deputy
President Watson in Feltex Australia Pty Ltd v Textile, Clothing and Footwear Union of
Australiaxxxvii in the following terms:
“I accept the proposition advanced by Feltex 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.”xxxviii
[53] Vice President Lawler in Datacom also found that:
[2014] FWC 1922
12
“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.”xxxix
[54] There is also a suggestion that the employees who have ongoing employment have in
some way been “cheated” or discriminated against because they have not received
redundancy payments, when compared to those made redundant who did received these
payments. However, this ignores the fact the employees who claimed to have been
discriminated against remain in ongoing employment with income and other benefits
continuing to be received and accrued. This situation can be contrasted with that of the
employees made redundant who may well find their redundancy payments quickly eroded
while they search for employment elsewhere.
[55] The issue of the employees non-transferable credits, such as personal or long service
leave entitlements, is also one that I have given consideration to. It is evident from the Full
Bench test cases that established the scale of redundancy payments that now appear in s.119
of the Act that redundancy entitlements are, in part, intended to compensate employees for the
loss of these entitlements. It follows that where there is no continuity employment, or no
recognition of these entitlements by the new employer, then this is a factor to be taken into
account in terms of whether that employer has obtained adequate acceptable employment for
the employees. In the present matter the employees have been paid out their accrued annual
leave and long service leave accruals, (where the employee’s length of service meant they had
gained such an entitlement). To the extent the employees have received these payments in
advance of when they might otherwise have been entitled to them they can be said to have
received some benefit as a result. However, as the submissions of Mr Crampton indicate, the
employees have suffered some detriment, given that they now commence to accrue these
entitlements as new employees with their new employer. However, these impacts are difficult
to quantify and will depend, for example, on any future requirements to access personal leave,
and how long the employees remain in employment with ACG in the future. As the decisions
referred to earlier also indicate the existence of some detrimental alteration to employment
conditions does not mean that acceptable alternative employment has not been obtained.
[56] The weight of evidence in this matter indicates the factors previous decisions of this
tribunal have found should be had regard to in determining whether new employment is an
acceptable alternative – work of a like nature, pay levels, hours of work, workload, work
location, travelling time, terms and conditions of employment – are all factors in this case
where there has been little or no change between what existed when the employees were
employed by FBIS and what is now in place. I am accordingly satisfied that the
overwhelming majority of the employees have been engaged by the new contractor on terms
and conditions of employment that are essentially the same as those that applied when they
were employed by FBIS. The evidence in fact indicates in some cases those terms and
conditions are more advantageous than those that existed previously at FBIS. I am
accordingly satisfied the test of what is acceptable alternative employment has been satisfied
and FBIS should be relieved of any obligation to make redundancy payments.
[57] However, I am also satisfied that the circumstances involving Ms Denise Pickering
warrant further consideration, based on her own evidence and the acknowledgements made by
FBIS in its submissions about her situation. She has clearly been engaged by ACG on a level
of salary that is substantially below what she was paid when employed by FBIS. Whilst
reluctant to single out particular employees I am satisfied her circumstances warrant
[2014] FWC 1922
13
differential treatment. It is difficult to be precise about how her situation should be dealt with,
however, I am satisfied it is appropriate to provide her with a redundancy entitlement based
on her length of service with FBIS, but to reduce that entitlement by 50 percent of what it
would otherwise be.
[58] Orders giving effect to this decision will be issued.
COMMISSIONER
Appearances:
Mr R Millar appeared on behalf of the Applicant.
Hearing details:
2014.
Melbourne:
12 February.
i Fair Work Act 2009 (Cth) at s.120
ii Outline of Submissions of the Applicant at para 1.
iii Transcript at PN227
iv MA000016 at cl.12.5
v Transcript at PN170
vi Ibid at PN171
vii Ibid at PN176
viii Ibid
ix [2013] FWC 5396
x Ibid at [42]
xi Ibid at [49]-[50]
xii Transcript at PN187
xiii Ibid at PN191
xiv C037CRA Dec 1029/90 S Print J4414
xv Ibid at page 5
xvi [2007] AIRC FB 1016
xvii Ibid at [24]
xviii Transcript at PN199
xix (2002) 222 CLR at 241
THE FAIR WORK COMMISSION SEAL THE
[2014] FWC 1922
14
xx [2009] AIRCFB 963 at [15]
xxi Letter from Graham Crampton to Fair Work Australia, 29 November 2013 at page 3
xxii Ibid
xxiii Letter from Mr Graham Crampton, Mr Kim Wong, Mr Eric Reedman, Ms Michelle Smith, Mr Rodney Holden, Mr Syed
Zaidi to the Fair Work Commission on 31 December 2013 at page 1
xxiv Statement of Graham Crampton dated 30 December 2013 at page 1
xxv Ibid at pages 1-2
xxvi Attachment to Statement of Graham Crampton dated 24 January 2014
xxvii Group statement of Mr Matthew Barber, Mr Nicolas Giffen, Mr Ronald Kent Griffith, Mr Malcolm Graham Predl and
Mr Nicolas Soter at Para 5
xxviii Ibid at para 9
xxix Ibid at para 14
xxx Statement of Denise Pickering, undated, received by the Fair Work Commission on 3 February 2014 by email
xxxi Transcript at PN249 and PN250
xxxii AE898880
xxxiii Fair Work Act 2009 (Cth) at s.121(9)
xxxiv C037CRA Dec 1029/90 S Print J4414 at page 4
xxxv [2013] FWC 1327
xxxvi [2007] AIRC FB 1016
xxxvii PR974699
xxxviii Ibid at [89]
xxxix [2013] FWC 1327 at [9]
Printed by authority of the Commonwealth Government Printer
Price code C, PR548871
