Australia: An employee commute thwarts an employer commuting redundancy pay

Last Updated: 15 January 2019
Article by Michael Byrnes

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.) (FW Act) 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 119 is 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 considered 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:

  1. 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. 
  2. 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. 
  3. 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). 

For further information please contact:

Michael Byrnes, Partner
Phone: + 61 2 9233 5544

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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