No redundancy payout: 'acceptable' job found

Cases

No redundancy payout: 'acceptable' job found

Web developer Get Started has succeeded in its bid to have a redundancy payment to a former employee reduced to zero.

Web developer Get Started has succeeded in its bid to have a redundancy payment to a former employee reduced to zero. 

Facts and background


The company employed web developer “ML” from 23 March 2016 until his position was made redundant on 2 March 2018. The company entered into an outsourcing deal whereby third-party developer “Levo” took on “overflow” work that Get Started couldn’t handle.

However, Get Started experienced a reduction in business towards the end of 2017. With the downturn in work persisting into 2018, Get Started’s managing director met ML and informed him that his employment would be terminated on the grounds of redundancy. A termination date of 2 March was agreed and ML was told he would be provided with his entitlements. 

A few days later, Levo got in touch asking to “borrow” Get Started’s staff to help it with a surge in work. The Get Started managing director told his counterpart at Levo that ML was being made redundant and recommended  him for any short-term or full-time work. He also sent a link to ML’s LinkedIn profile. ML was then contacted by Levo. He was interviewed and accepted a full-time job. Levo did not advertise to fill the job. 

Get Started applied to the Fair Work Commission to have ML’s redundancy payment reduced to zero. 

The law


The Fair Work Act contains the “National Employment Standards” which are minimum standards of employment that cannot be displaced (sections 59 and 61(1)). 

Under the Standards, employees are entitled to be paid redundancy pay providing certain qualifying conditions are met (s119) and no s121 exemptions apply. However, if an employer obtains “other acceptable employment for the employee,” then it can apply to the Fair Work Commission to have the amount of redundancy pay reduced to an amount the commission thinks appropriate. That amount can be nil (s120).

In issue


The question for the commission was whether Get Started “obtained” employment for ML, and, secondly, whether it was “acceptable” employment. 

Arguments


Get Started said its managing director put ML forward for the new job and, had it not been for the managing director’s efforts, then ML would not have been offered employment with Levo.  The company also pointed out that the original query from Levo was to “borrow” staff for a short period whereas Get Started’s managing director proposed that the other company engage ML on a permanent basis.

ML’s account was factually similar to Get Started’s account. However, ML added that the managing director did not say or suggest to him that the job opportunity at the third-party company would affect his redundancy entitlement. ML said the referral by the MD was a “personal” referral.

He further argued that the third-party developer offered him a job on the basis of his skills and experience. He said that, had he known that taking a job with that particular third party could affect his redundancy pay, he would not have accepted Levo’s job offer given he was offered a job by another organisation wholly unconnected to Get Started. 

Considerations 


The Fair Work Commission considered the earlier case of FBIS v MUA which was heard in the full court of the Federal Court.

In that case, the court noted the Oxford English Dictionary meaning of the word “obtained” and concluded that employment was obtained if it was the result of the “conscious, intended, acts of the person concerned”. The court said that “obtain” in this context also meant to “procure another employer to make an offer”. 

The commissioner in the immediate case considered that the FBIS case did not require an organisation to “achieve the certainty” of an offer of employment and therefore, in the commission’s view, Get Started had “obtained” an offer of employment. 

Turning to the issue of whether the employment was “acceptable”, the commissioner noted that it was “evidently acceptable in the sense that [ML] accepted it”. However, the commission also noted that whether or not a person accepted a job was not necessarily determinative of whether the employment was “acceptable” for the purposes of s120.

“Acceptable… also means ‘suitable’,” the commissioner said, adding that it was “well-settled” that the question of whether employment was “acceptable” was to be approached objectively involving consideration of a wide range of matters including terms, conditions and duties. That said, acceptance of employment was a “strong indicator” that the offer was “acceptable”.

The commissioner noted that ML accepted the job offer voluntarily and, although he did not know it might accept his redundancy payment, s120 “squarely” notes that obtaining acceptable employment may affect a redundancy entitlement. It was also noted that the substance of the work at the third-party developer was similar to the work he had previously performed and the annual salary at the new job was $5K more than the old job. Finally, the Commissioner took into account that ML was offered another role by another organisation but instead accepted the role at Levo. 

All of these factors tended toward a view that the other employment was “acceptable” for the purposes of s120. 

Decision


The commissioner decided the discretion in s120 to reduce the redundancy pay to zero should be exercised.

The bottom line: While a worker’s redundancy entitlements cannot be set aside, employers can, in certain circumstances, persuade the Fair Work Commission to reduce the amount payable on redundancy down to zero.  It appears from this case that encouraging another employer to offer a position that has similar work and pay may be enough to persuade the Commission to exercise its discretion to reduce the amount payable on redundancy to zero. 

Read the judgment


Get Started Pty Ltd v Matthew Lee [2018] FWC 3295 (6 June 2018)
 
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