Worker’s commute thwarts employer commuting redundancy pay

Employers need to carefully consider all aspects of employment, not just the fundamental terms

Worker’s commute thwarts employer commuting redundancy pay

by Michael Byrnes, Partner, Swaab

In the recent Fair Work Com­mis­sion (FWC) deci­sion in Aus­tralian Footwear T/A Diana Fer­rari [2018] FWC 7864 the employ­er, a busi­ness trad­ing under the name Diana Fer­rari, applied to the FWC to vary the redun­dan­cy amount payable to an employ­ee, Ms Tzortzis, whose employ­ment was ter­mi­nat­ed on the basis of redun­dan­cy, to nil.

This appli­ca­tion was made pur­suant to sec­tion 120 of the Fair Work Act 2009 (Cth.) (FWAct) which is in the fol­low­ing terms:

"Vari­a­tion of redun­dan­cy pay for oth­er employ­ment or inca­pac­i­ty to pay:

  1. This sec­tion applies if:
    1. an employ­ee is enti­tled to be paid an amount of redun­dan­cy pay by the employ­er because of sec­tion 119; and 
    2. the employ­er:
      1. obtains oth­er accept­able employ­ment for the employ­ee; or
      2. can­not pay the amount
  2. On appli­ca­tion by the employ­er, the FWC may deter­mine 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 119is the reduced amount spec­i­fied in the determination.”

The employ­ee opposed the appli­ca­tion and argued that she should receive the full amount of statu­to­ry redun­dan­cy pay (in accor­dance with the quan­tum pre­scribed in sec­tion 119 of the FW Act).

It was com­mon ground that the posi­tion held by Ms Tzortzis was redun­dant and that Diana Fer­rari had obtained alter­na­tive employ­ment for her. The ques­tion to be deter­mined by the FWC was whether that alter­na­tive employ­ment was ​“oth­er accept­able employ­ment”.

In con­sid­er­ing this ques­tion, Deputy Pres­i­dent Clan­cy cit­ed the deci­sion of the Full Bench of the FWC in Amer­i­can Com­mer­cial Cater­ing Pty Ltd v Pow­ell and Togia; Pow­ell v Aus­tralian Com­mer­cial Cater­ing Pty Ltd [2016] FWCFB 5467 which states:

“In rela­tion to S.120(1)(b)(i), whether alter­na­tive employ­ment obtained by the employ­er is ​‘accept­able’ is to be deter­mined objec­tive­ly, not by ref­er­ence to whether the employ­ment is sub­jec­tive­ly accept­able to the employ­ee. The deter­mi­na­tion of whether alter­na­tive employ­ment is accept­able requires an assess­ment and val­ue judg­ment on the part of the deci­sion-mak­er. The employ­er ​‘obtains’ oth­er accept­able employ­ment when it acquires or gets the employ­ment by its con­scious, intend­ed acts.”

Deputy Pres­i­dent Clan­cy also con­sid­ered the deci­sion of the Full Bench of the Aus­tralian Con­cil­i­a­tion and Arbi­tra­tion Com­mis­sion (a pre­de­ces­sor tri­bunal to the FWC) in Cloth­ing& Allied Trades Union v Hot Tuna Pty Ltd (1988) 27 IR 226 which rel­e­vant­ly stated:

“…the test of accept­abil­i­ty of the alter­na­tive employ­ment is an objec­tive one involv­ing a con­sid­er­a­tion of such mat­ters as pay lev­els, hours of work, senior­i­ty, fringe ben­e­fits, work­load and speed, job secu­ri­ty and oth­er matters.”

The posi­tion made redun­dant was at the Diana Fer­rari Birken­head Point store (in the inner west of Syd­ney). The posi­tion offered was at the Williams Mac­quar­ie store in locat­ed in the Mac­quar­ie Cen­tre at North Ryde.

In con­sid­er­ing the ​“oth­er accept­able employ­ment” test hav­ing regard to the evi­dence pre­sent­ed by the par­ties, Deputy Pres­i­dent Clan­cy held that the new posi­tion offered the same part-time hours, rate of pay and senior­i­ty to Ms Tzortzis she had been receiv­ing in the redun­dant role. The deter­min­ing fac­tor was the issue of com­mut­ing to work.

In this regard, Deputy Pres­i­dent Clan­cy observed:

“On the issue of com­mut­ing time, if dri­ving her own vehi­cle, I am sat­is­fied that the com­mut­ing time for Ms Tzortzis to and from Williams Mac­quar­ie has not increased to such an extent that weighs against a find­ing that Diana Fer­rari obtained oth­er accept­able employ­ment. I am per­suad­ed how­ev­er that if the alter­na­tive was that she catch pub­lic trans­port, the extra time would weigh against a find­ing that Diana Fer­rari obtained oth­er accept­able employ­ment for Ms Tzortzis.”

The analy­sis of the fea­si­bil­i­ty of Ms Tzortzis dri­ving to work includ­ed a con­sid­er­a­tion of her capac­i­ty to park her car at or near the loca­tion of her offered position.

The issue of park­ing was in dis­pute in evi­dence. Ms Tzortzis sub­mit­ted that street park­ing was eas­i­ly acces­si­ble at Birken­head Point and that park­ing on the street did not incur park­ing fees.

On the oth­er hand, Diana Fer­rari sub­mit­ted that the Mac­quar­ie Cen­tre has 5,000 paid park­ing spaces avail­able with staff park­ing avail­able at a dis­count­ed rate of $10 per day. It also assert­ed untimed street park­ing is avail­able in the vicin­i­ty of the shop­ping centre.

In weigh­ing up the issue of park­ing, Deputy Pres­i­dent Clan­cy observed:

“…the ques­tion becomes one of con­sid­er­ing the impact of the cost of park­ing at Williams Mac­quar­ie which would be at least $50 per week. On the hours of work I’ve been advised Ms Tzortzis per­forms, I’ve cal­cu­lat­ed her week­ly wages to be approx­i­mate­ly $615 based on her being a Retail Employ­ee Lev­el 1 under the Gen­er­al Retail Indus­try Award 2010 (the Award). The added expense of park­ing at Williams Mac­quar­ie as a pro­por­tion of these wages is not insignif­i­cant for a retail work­er on Award rates of pay.”

Deputy Pres­i­dent Clan­cy held:

“In all the cir­cum­stances there­fore, where Ms Tzortzis is earn­ing the Award rate of pay, the addi­tion­al expense for park­ing per­suades me that she has not been offered sin­gle ​‘oth­er accept­able employ­ment’ by Diana Fer­rari. Giv­en this, I declined to reduce the redun­dan­cy pay which Ms Tzortzis is enti­tled because of s.119 of the Act and dis­miss the appli­ca­tion made by Diana Fer­rari.”

Impli­ca­tions for employ­ers
Some obser­va­tions for employ­ers aris­ing from this deci­sion when offer­ing alter­na­tive employ­ment with a view to reduc­ing redun­dan­cy payments:

The ​“oth­er accept­able employ­ment” test is not eas­i­ly sat­is­fied by employ­ers. The FWC has a reluc­tance to reduce the quan­tum of redun­dan­cy oth­er­wise payable unless it is clear the employ­ee will not suf­fer any dis­ad­van­tage in accept­ing the employ­ment offered.

Employ­ers need to care­ful­ly con­sid­er all aspects of employ­ment, not just the fun­da­men­tal terms such as pay, posi­tion, hours and type of work. In this case the out­come turned on the avail­abil­i­ty and acces­si­bil­i­ty of park­ing which is the type of fac­tor that employ­ers, in under­tak­ing an assess­ment of an offer to be made to an employ­ee, might over­look or con­sid­er to be peripheral.

While Syd­ney is right­ly regard­ed as one of the world’s great cities, ease of com­mute is cer­tain­ly not its strong suit. In deter­min­ing whether a posi­tion offered to an employ­ee can be regard­ed as ​“oth­er accept­able employ­ment” issues such as trav­el time, avail­abil­i­ty and reg­u­lar­i­ty of pub­lic trans­port and park­ing should be con­sid­ered (by ref­er­ence to the res­i­dence of the employee).

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