| [2019] FWC 534 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.120—Redundancy pay
Manheim Pty Ltd
v
Christopher Cordiner
(C2018/6075)
DEPUTY PRESIDENT COLMAN |
MELBOURNE, 31 JANUARY 2019 |
Variation of redundancy pay
[1] Manheim Pty Ltd (Manheim) has made an application under s 120(2) of the Fair Work Act 2009 (Act) to have the Commission reduce the redundancy entitlement of Mr Christopher Cordiner, a former employee of the company whose employment ended for reason of redundancy.
[2] Mr Cordiner commenced employment with Manheim on 24 April 2012. From August 2017 he was employed in the position of head of truck and machinery. His employment ended in late 2018. As he had more than 6 but less than 7 years’ service, Mr Cordiner is entitled to 11 weeks’ redundancy pay, pursuant to s 119 of the Act.
[3] The company seeks to have the Commission reduce this entitlement to nil, on the basis that it offered Mr Cordiner an alternative role in the company which constituted ‘other acceptable employment’ for the purposes of s 120(1)(b)(i) of the Act.
[4] Following a telephone mention, I issued directions to the parties to file and serve submissions and any witness statements or other documents on which they sought to rely. Each party filed written submissions. Manheim also filed unsworn statements from Mr Charles Cumming, chief executive officer of inventory solutions, Mr Joshua Emeny, director of sales and retail, and Ms Elaine Prins, senior human resources business partner. The parties requested that I determine the application on the papers, and after reviewing the materials filed, I considered that it was appropriate for me to do so.
[5] Section 120 confers on the Commission a discretion to reduce the amount of redundancy pay to which an employee would otherwise have been entitled under s 119 of the Act. Section 120(1) states that the section applies if an employee is entitled to be paid an amount of redundancy pay under s 119, and the employer ‘obtains other acceptable employment’ for the employee. These are the jurisdictional facts that must be established before the Commission may exercise its discretion. Section 120(2) then states that the Commission ‘may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that the FWC considers appropriate’. If the Commission makes an order under s 120(2), the amount of redundancy pay to which the employee is entitled is the reduced amount specified in the determination (see s 120(3)).
[6] The key questions for consideration in the present matter are whether Manheim obtained ‘other acceptable employment’ for Mr Cordiner, and if so whether I should exercise my discretion to reduce the amount of Mr Cordiner’s redundancy pay.
[7] The circumstances surrounding the redundancy of Mr Cordiner’s position of head of truck and machinery and the discussion of the alternative role offered to him are largely uncontested, although the parties differ on certain points.
[8] The company’s previous national structure comprised a truck and machinery ‘segment’ or business unit. Mr Cordiner was one of two ‘heads’ of this segment and was responsible for its seven sales staff. The second head within the segment was Mr Richard Skellern who was in charge of ‘industrial and new business.’
[9] In October 2018, the company implemented a restructure under which a new and expanded national segment was created called ‘truck, machinery and industrial’. The new segment comprised four new head roles, three of which had accountability for sales staff, and the fourth being ‘head of operations’, covering four existing state sales managers and their staff.
[10] On 24 September 2018, Mr Emeny wrote to Mr Cordiner and advised him that as a result of the restructure his position would be made redundant effective 1 October 2018. Mr Emeny further stated that Mr Cordiner had been identified for an alternative role within the new structure, namely the positon of head of industrial operations. He stated that the position would become effective 1 October 2018, and that Mr Cordiner’s remuneration package would remain the same. He said that the position would report to Mr Skellern, and indirectly to Mr Emeny. Mr Cordiner requested time to consider the offer and to seek legal advice.
[11] On 9 October 2018 Mr Cordiner advised the company that he considered the alternative position to be a demotion. He said that he was concerned that the position reported to Mr Skellern, who had been appointed to lead the new truck, machinery and industrial segment, whereas previously both he and Mr Skellern reported to Mr Emeny, the director of sales and retail. Mr Emeny and Mr Cumming each spoke with Mr Cordiner about the new role and encouraged him to accept it. Mr Cumming told Mr Cordiner that he considered the reporting lines were in the best interests of the company. Mr Emeny suggested that Mr Cordiner trial the new role for six months, however Mr Cordiner declined.
[12] On 16 October 2018 Mr Emeny wrote again to Mr Cordiner, in which he stated that the company understood Mr Cordiner’s disappointment at not receiving a promotion to the more senior role of head of truck, machinery and industrial reporting directly to Mr Emeny, but that if Mr Cordiner left the company, it would be his decision and not because no reasonable alternative existed. The letter stated that the company would in that event apply to the Fair Work Commission to vary his redundancy entitlement to nil. The letter confirmed that if the alternative role was not accepted by 22 October 2018, Mr Cordiner’s employment would end on 22 November 2018 by reason of redundancy and his decision to reject other acceptable alternative employment.
[13] Mr Cordiner did not accept the alternative role and his employment ended on 22 November 2018.
[14] The company contends that it obtained other acceptable employment for Mr Cordiner within the meaning of s 120 of the Act. It submits that the role was objectively acceptable. It says that the status of the new position was on par with Mr Cordiner’s previous role and was not a demotion. The company contends that the new position would have required Mr Cordiner to lead the four truck and machinery sales managers for Queensland, New South Wales, Western Australia and Victoria / Tasmania, to indirectly lead their business development and operations teams, and to have responsibility for profit and loss at the state level. Manheim says that other terms and conditions of employment, including remuneration, location and hours of work would have remained the same. It says that changes in reporting lines are commonplace in corporate restructures, and that in any event, Mr Cordiner’s contract of employment contained a clause that allowed the company to vary his reporting line from time to time. The company contends that by rejecting the offer of alternative employment and failing to provide a reason why the new reporting line was unacceptable, Mr Cordiner was in breach of his contract of employment.
[15] Mr Cordiner says that the alternative role was not acceptable. He submits that, instead of reporting to a director, the new role reported to someone who was his ‘peer’ and on the same level in the organisation, namely Mr Skellern. Mr Cordiner contends that although the new role maintained his remuneration, it was in substance a demotion and was unacceptable to him. He says that, in his old role, he managed a national team of seven, comprising three national account managers, three national business development managers, and the company’s senior valuer. He says that he also had four state sales managers reporting to him indirectly, and that he had ultimate responsibility for the entire profit and loss of the truck and machinery business, reporting to the sales director. He states that he was responsible for annual sales and operational budgets, forecasting, presentations to the executive leadership team and strategic advice to the parent company.
[16] Mr Cordiner contends that the new role did not maintain his responsibility for the entire profit and loss of the segment and would only have had him carry responsibility for operational expenditure, such that he would no longer be responsible for the success of the business. He submits that the new role did not have national responsibility due to the removal of his oversight of seven national staff, replacing this with oversight of four state level staff, which previously reported to a lower level manager in the old structure.
[17] In a reply submission, the company stated that Mr Cordiner’s previous role did not carry ultimate responsibility for the profit and loss of his segment, but rather that he was responsible only for gross sales targets nationally. The company submitted that the responsibility for the profit and loss of the segment sat with the general manager for each state, and that this remains the same following the restructure.
[18] It is clear that in the present case, Manheim ‘obtained’ other employment for Mr Cordiner. It offered Mr Cordiner a clearly defined position within the restructured organisation. There was no debate or uncertainty about what was being offered. The company discussed the role with Mr Cordiner while he was still employed. It afforded him time to consider the new position, and extended deadlines set for his reply. The question then is whether the other employment obtained for Mr Cordiner was ‘acceptable’.
[19] Mr Cordiner did not accept the other employment. However, whilst relevant, this is not determinative of whether the employment was ‘acceptable’ for the purposes of s 120. ‘Acceptable’ means ‘able to be agreed to’, but it also means ‘suitable’. It is well-settled that the question of whether other employment is ‘acceptable’ is to be approached objectively, and with regard to all the circumstances, including the terms and conditions of employment and duties. 1 Logically, in the context of s 120, the work associated with ‘other employment’ with the same employer will be different from that of the position that has become redundant, at least to some degree. If there were no differences, the old role would presumably still exist. In my view, in order to be ‘acceptable’, the work of the new role need not necessarily be closely similar to the old role, although the extent and quality of the differences are relevant. Other matters to be considered include the new role’s remuneration and hours of work, where the role is to be performed, other conditions of employment, and how these compare with the previous role.
[20] In the present matter, the role offered to Mr Cordiner maintained his remuneration and reflected his previous arrangements in relation to hours of work and location. Mr Cordiner’s central contention is that the role was not acceptable because his reporting line would have been downgraded and he would have been required to report to Mr Skellern, whom he considered a peer. For Mr Cordiner, the new role was a demotion. I accept that the seniority of the alternative role is an important consideration. However, I do not consider that in this case the alternative role amounted to a demotion, nor do I consider that the revised reporting line rendered the alternative role unacceptable.
[21] First, the new role did not, as Mr Cordiner contends, report to a ‘peer’. It reported to a former peer. It will be recalled the Mr Skellern was promoted as part of the restructure to a position senior to the ‘head’ role he had previously performed. It was Mr Skellern’s old role that was of the same seniority to Mr Cordiner. Secondly, the substance of the new role remained managerial and supervisory. Mr Cordiner would have been one of the segment ‘heads’ and led the four state segment managers across Australia. Thirdly, whether the new position is to be considered a demotion must be carefully assessed by reference to the previous position. Mr Cordiner’s contract of employment dated 14 August 2017 stated: ‘Your duties are described in the position description as set out in Schedule One and you will report to the Director of Sales (Manager). However, Manheim may vary your reporting line from time to time.’ Accordingly, even if the restructure had not occurred, Manheim could have changed Mr Cordiner’s reporting line. Some limitations could, perhaps, be implied from a proper contextual reading of this provision, for example, that he would not be made to report to a person of lower seniority. However, in this case, the relevant direct report would have been a person in a more senior position.
[22] In considering the overall acceptability of the alternative employment offered to Mr Cordiner, it is also appropriate to have regard to the scope of the contract of employment that applied to his previous role. The ‘position purpose’ set out in Schedule 1 of the contract stated that the incumbent would grow the company position within the Australian market by developing products and services nationally that secure current and new business. In my view, Mr Emeny’s letters to Mr Cordiner of 24 September and 16 October 2018 describe the new role in terms that are consonant with the essence of Mr Cordiner’s previous role. Further, I note that the final paragraph in Schedule 1 of Mr Cordiner’s contract of employment stated the following:
“It is not the intention of this position description to limit the scope of responsibilities of the position but to highlight the most important aspects of the position. It is essential that all employees are committed to their positions and the success of the enterprise, and maintain a willingness to accept total flexibility in the job function and perform any other reasonable duties and responsibilities which may be assigned to the position from time to time. This includes redeployment to other divisions / areas if required, in order to meet business demands and customer service needs, and within your skills, qualifications and experience, undertake other responsibilities and perform other duties as necessary to meet business operating requirements.”
[23] Mr Cordiner’s signature appears immediately below this text in the contract. Although it is not necessary for me to determine the question, I consider that it is at least arguable that the company could have required Mr Cordiner to perform the new role, on the basis that it fell within the scope of his existing contract of employment, being a redeployment to another division or area to perform work within his skills, qualifications and experience. 2 For present purposes however, it is sufficient to note that the contractual provisions referred to above underscore the ‘acceptability’ of the alternative role that the company offered to Mr Cordiner.
[24] The parties differed on the question of the extent to which Mr Cordiner was responsible for profit and loss. I accept the position of the company that Mr Cordiner’s previous role had responsibility for gross sales targets nationally, rather than ultimate responsibility for the profit and loss of the segment. The ‘position purpose’ set out in Mr Cordiner’s contract is consistent with a focus on gross sales (‘ensuring the company delivers effective sales’), and there is no reference in the contract to ultimate profit and loss responsibility. But in any event, a reasonable change to any such function would have been permissible under the passage from Schedule 1 of the contract excerpted above.
[25] I appreciate that Mr Cordiner did not find it personally acceptable to report to a person who had previously been his peer but was then promoted above him. I also accept that Mr Cordiner is aggrieved by the perceived diminution in status associated with no longer reporting directly to Mr Emeny. But these were matters contemplated and permitted by his contract of employment for his previous role.
[26] Mr Cordiner sought to rely on my decision in Electricity Wizard Pty Ltd v Tauiliiili 3 (Tauiili) in support of his contention that the diminished status of the restructured role renders it of a different nature, so as to fall outside the bounds of ‘acceptable other employment.’ However, the facts of that case were different. In Tauiliili, I found that the previous role had a primarily supervisory function, whereas the alternative role was primarily sales-based.4 The new role also entailed a reduction in the possibility of the employee earning commissions. These factors led to my conclusion that the alternative role was not ‘other acceptable employment’.
[27] Taking into account all of the circumstances, I consider that the employment that Manheim obtained for Mr Cordiner was ‘acceptable other employment’ for the purposes of s 120(1)(b)(i) of the Act.
[28] Having established the jurisdictional facts required by s 120(1), I must now consider whether to exercise my discretion to reduce the amount of Mr Cordiner’s redundancy pay. In doing so, it is appropriate to balance the conclusion that Manheim obtained other acceptable employment for Mr Cordiner against any considerations that might tell against the exercise of the discretion in this case.
[29] Mr Cordiner submitted that a consideration relevant to the exercise of my discretion is the fact that the present matter involves a case of genuine redundancy, and that he is therefore precluded from applying for an unfair dismissal remedy under s 394 of the Act. However, Mr Cordiner’s base pay annual remuneration of over $200,000 exceeds the high income threshold, and there was no suggestion in the parties’ materials that his employment was covered by an award or enterprise agreement. Therefore, irrespective of whether the dismissal was a case of genuine redundancy, Mr Cordiner does not appear to me to be a person protected from unfair dismissal (see s 382). In any event, I am not convinced that it would be relevant to consider the absence of a possible unfair dismissal remedy, as s 120 of the Act is concerned not with unfair dismissal, but with fair alteration of a person’s redundancy entitlements, where an employer has obtained acceptable alternative employment for the employee. I consider that it is fair in the present circumstances to reduce the redundancy entitlement to nil. Acceptable alternative employment was offered to Mr Cordiner and I do not consider there to be any countervailing considerations telling against the exercise of my discretion.
[30] I am satisfied that Manheim obtained other acceptable employment for Mr Cordiner for the purpose of s 120 of the Act, and that in all the circumstances I should exercise my discretion to reduce Mr Cordiner’s redundancy pay to nil.
[31] An order will be issued separately reflecting this decision.
DEPUTY PRESIDENT
Final written submissions:
Manheim Pty Ltd: 4 December 2018
Christopher Cordiner: 16 December 2018
Manheim Pty Ltd: 21 December 2018
Printed by authority of the Commonwealth Government Printer
<PR704390>
1 Clothing and Allied Trades Union of Australia v Hot Tuna Pty Ltd (1988) 27 IR 226 at 230-231; Re Target Retail Agreement 2001 PR916204 at [6]
2 The company did not dispute that Mr Cordiner had an entitlement to redundancy pay under s 119. I consider that his employment was terminated at the company’s initiative because it no longer required the ‘job done by the employee’ to be done by anyone (see s 119(1)).
4 Ibid at [26].