Redundancy pay; unfairness and transfer of employment s120, s120

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An employee has sought and obtained an order under sub-sec 122(4) of the Fair Work Act to the effect that he should be paid redundancy pay by a former employer despite having rejected an offer of employment by another employer which would have recognized the employee’s former service with the first employer in circumstances which would otherwise have constituted a transfer of employment under the Act.

The grounds which the employee made out and which were accepted by the Commission were that the transfer of employment provisions would have created an inequity for the employee. The Deputy President who heard the case made an order that the employee receive a sum equivalent to 75% of what would otherwise have been the value of statutory redundancy; see sec 119..

“RELEVANT STATUTORY PROVISIONS

[12] Part 2-2 Division 11 of the Act deals with Notice of termination and redundancy pay. The statutory provisions relevant to this matter are ss. 119, 120 and 122 which are found in Sub-division B Redundancy Pay of that part, as follows:

“119 Redundancy pay

Entitlement to redundancy pay

(1) An employee is entitled to be paid redundancy pay by the employer if the employee’s employment is terminated:

(a) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or

(b) because of the insolvency or bankruptcy of the employer.

Note: Sections 121, 122 and 123 describe situations in which the employee does not have this entitlement.

Amount of redundancy pay

(2) The amount of the redundancy pay equals the total amount payable to the employee for the redundancy pay period worked out using the following table at the employee’s base rate of pay for his or her ordinary hours of work:

Redundancy pay period
Employee’s period of continuous service with the employer on terminationRedundancy pay period
1At least 1 year but less than 2 years4 weeks
2At least 2 years but less than 3 years6 weeks
3At least 3 years but less than 4 years7 weeks
4At least 4 years but less than 5 years8 weeks
5At least 5 years but less than 6 years10 weeks
6At least 6 years but less than 7 years11 weeks
7At least 7 years but less than 8 years13 weeks
8At least 8 years but less than 9 years14 weeks
9At least 9 years but less than 10 years16 weeks
10At least 10 years12 weeks

120 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.

(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.”

[13] Section 122 is in the following terms:

“122 Transfer of employment situations that affect the obligation to pay redundancy pay

Transfer of employment situation in which employer may decide not to recognise employee’s service with first employer

(1) Subsection 22(5) does not apply (for the purpose of this Subdivision) to a transfer of employment between non-associated entities in relation to an employee if the second employer decides not to recognise the employee’s service with the first employer (for the purpose of this Subdivision).

Employee is not entitled to redundancy pay if service with first employer counts as service with second employer

(2) If subsection 22(5) applies (for the purpose of this Subdivision) to a transfer of employment in relation to an employee, the employee is not entitled to redundancy pay under section 119 in relation to the termination of his or her employment with the first employer.

Note: Subsection 22(5) provides that, generally, if there is a transfer of employment, service with the first employer counts as service with the second employer.

Employee not entitled to redundancy pay if refuses employment in certain circumstances

(3) An employee is not entitled to redundancy pay under section 119 in relation to the termination of his or her employment with an employer (the first employer ) if:

(a) the employee rejects an offer of employment made by another employer (the second employer ) that:

(i) is on terms and conditions substantially similar to, and, considered on an overall basis, no less favourable than, the employee’s terms and conditions of employment with the first employer immediately before the termination; and

(ii) recognises the employee’s service with the first employer, for the purpose of this Subdivision; and

(b) had the employee accepted the offer, there would have been a transfer of employment in relation to the employee.

(4) If the FWC is satisfied that subsection (3) operates unfairly to the employee, the FWC may order the first employer to pay the employee a specified amount of redundancy pay (not exceeding the amount that would be payable but for subsection (3)) that the FWC considers appropriate. The first employer must pay the employee that amount of redundancy pay.”

[14] Sub-section 22(5) provides as follows:

“When service with one employer counts as service with another employer

(5)  If there is a transfer of employment (see subsection (7)) in relation to a national system employee:

(a)  any period of service of the employee with the first employer counts as service of the employee with the second employer; and

(b)  the period between the termination of the employment with the first employer and the start of the employment with the second employer does not break the employee’s continuous service with the second employer (taking account of the effect of paragraph (a)), but does not count towards the length of the employee’s continuous service with the second employer.

Note:          This subsection does not apply to a transfer of employment between non-associated entities, for the purpose of Division 6 of Part 2-2 (which deals with annual leave) or Subdivision B of Division 11 of Part 2-2 (which deals with redundancy pay), if the second employer decides not to recognise the employee’s service with the first employer for the purpose of that Division or Subdivision (see subsections 91(1) and 122(1)).”

[15] Sub-sections 22(7) – (8) are in the following terms:

“Meaning of transfer of employment etc.

(7) There is a transfer of employment of a national system employee from one national system employer (the first employer) to another national system employer (the second employer ) if:

(a) the following conditions are satisfied:

(i) the employee becomes employed by the second employer not more than 3 months after the termination of the employee’s employment with the first employer;

(ii) the first employer and the second employer are associated entities when the employee becomes employed by the second employer; or

(b) the following conditions are satisfied:

(i) the employee is a transferring employee in relation to a transfer of business from the first employer to the second employer;

(ii) the first employer and the second employer are not associated entities when the employee becomes employed by the second employer.

Note: Paragraph (a) applies whether or not there is a transfer of business from the first employer to the second employer.

(8) A transfer of employment:

(a) is a transfer of employment between associated entities if paragraph (7)(a) applies; and

(b) is a transfer of employment between non-associated entities if paragraph (7)(b) applies.”

[16] The term “associated entity” is defined in s. 12 of the Act as having the meaning given by s. 50AAA of the Corporations Act 2001. In the present case, there is no suggestion that TAMS and MIPEC were associated entities. Section 120 operates where an employee is dismissed in circumstances that entitle to the employee to redundancy payments, and s. 120(b)(1) provides a basis for an employer otherwise required to make redundancy payments to the employee, to seek an order to reduce those payments in circumstances where the employer obtains other acceptable employment for the employee. The new employment referred to in s. 120(b) does not necessarily involve a transfer of the employment of the employee concerned but may operate where the second employer does not recognise the service of the employee with the first employer.

[17] Section 122 of the Act deals with how “transfer of employment situations” affect the obligation of an employer to pay redundancy pay. Section 122(2) provides an exception to the entitlement of an employee to redundancy pay under s. 119 in circumstances where there is a transfer of employment from the first employer to the second employer. Section 122(3) creates a further exception to the entitlement of an employee to redundancy pay. The exception in s. 122(3) operates where an employer (the first employer) terminates the employment of an employee and provides that an employee is not entitled to redundancy payments where the employee is offered employment by a second employer, if:

  • The offer of employment from the second employer is on terms and conditions that are the same or similar, or on balance, no less favourable than the employee’s terms and conditions with the first employer;
  • The second employer recognises the service of the employee with the first employer for the purposes of Sub-division B (Redundancy); and
  • If the employee had accepted the position, there would have been a transfer of employment in relation to the employee.

[18] Section 122(4) operates so that an employee who is not entitled to redundancy payments because of s. 122(3), can seek an order from the Commission for the first employer to pay a specified amount of redundancy pay (not exceeding the amount the employee would be entitled to if s. 122(3) did not apply) where the Commission is satisfied that s. 122(3) operates unfairly to the employee.

[19] In the present case the Applicant’s employment was not transferred and the exception in s. 122(2) does not apply. The Applicant seeks an order under s. 122(4) which, as previously stated, empowers the Commission to make an order in circumstances where s. 122(3) operates unfairly.

[20] An application for an order under s. 122(4) is predicated on the fact that s. 122(3) “operates”. It follows that by seeking an order under s. 122(4) the Applicant is taken to generally accept that he has been offered employment by a second employer (TAMS) on terms and conditions the same or similar to the employee’s terms and conditions with the first employer (MIPEC) and that his service with the first employer would have been recognised by the second employer. In order to succeed with the application under s. 122(4) the Applicant must establish that notwithstanding that s. 122(3) operates to exclude his entitlement to redundancy payments, that section operates unfairly.

[21] To establish unfairness, the Applicant is not limited to whether the employment that was offered meets the criteria in s. 123 but can rely on all of the circumstances which operated at the time of the termination of his employment including the manner in which he was dealt with by the first or the second employer – in the present case MIPEC and TAMS.

[22] The material filed by the Applicant contains assertions of unfairness upon which he bases his application under s. 122(4). The material filed by the Respondent asserts that the Applicant unreasonably failed to meet with management of TAMS to discuss the offer of alternative employment and that the offer was on terms and conditions substantially similar to, and, considered on an overall basis, no less favourable than his terms and conditions of employment with MIPEC, immediately before the termination and that his service would have been recognised by TAMS. As previously noted, the Respondent also maintains that it should not be penalised by an order requiring it to make redundancy payments to the Applicant on the basis of errors made by its Human Resources Consultant, Ms Beeson.

EVIDENCE

[23] The evidence can be summarised as follows. In relation to the Applicant’s personal circumstances, at the point of the acquisition of MIPEC by TAMS, the Applicant had been on a period of leave from May 2018, due to medical issues, that compounded after he was involved in a vehicle accident on 27 June 2018.5

[24] On 20 December 2018, the Applicant received an email from Ms Beeson, MIPEC’s Human Resources Consultant, informing him that MIPEC was considering terminating his employment because: he had been on a period of leave for more than three months; could not carry out the inherent requirements of his role; and was not fit for full duties. The letter requested that the Applicant provide medical certificates and reports and advised that if he intended returning to work in the short term or his status on restricted duties changed, the Applicant should provide a proposed return to work date and confirm that he could provide a fitness for work and full duties medical certificate.6

[25] The Applicant had no knowledge of Ms Beeson’s engagement as a consultant for MIPEC and on 28 December 2018 responded to Ms Beeson’s email requesting that she confirm her identity and questioning the genuineness of the email on the basis that he did not know Ms Beeson. The response from Ms Beeson’s office was an out of office message. On 9 January 2019 the Applicant received an email from an Administration Supervisor at MIPEC confirming that Ms Beeson had been instructed to act on behalf of, and represent MIPEC, in relation to employment matters.

[26] On 10 January 2019, the Applicant corresponded by email to Ms Beeson informing her that his return to work date was 28 December 2018 and asserting that his work entitlements had been “removed” to the point that a reasonable person would see the situation as termination of employment. The Applicant also stated in his email that his past experience was that MIPEC would choose a doctor to confirm his return to work and sought advice as to which doctor he would be required to see.

[27] Ms Beeson responded on 11 January 2019 stating to the Applicant that a fitness for work assessment would be organised with a MIPEC appointed medical practitioner, and confirming that the Applicant was still an employee of MIPEC until a fitness for work assessment had been conducted and the results of that assessment reviewed. Ms Beeson organised a fitness for work assessment for the Applicant to be conducted in Gladstone and communicated this to him. That assessment did not proceed after the Applicant informed Ms Beeson that he would need flights and accommodation as he was based in Brisbane. It is apparent that the Applicant took issue with the fact that Ms Beeson did not know where he was located.

[28] On 11 January 2019 Ms Beeson emailed the Applicant thanking him for confirming his fitness to return to work and advising that a fitness for work assessment with a MIPEC appointed medical practitioner would be arranged in Brisbane. The email also stated: “I can confirm that you are still a MIPEC employee until the fitness for work assessment has been conducted and the results reviewed.”

[29] The Applicant stated that he received a phone call from Mr Bartlett, Chief Financial Officer of TAMS on 16 January 2019. Mr Bartlett said TAMS was looking at purchasing MIPEC and asked whether the Applicant was aware of this. The Applicant said in response that he had heard someone was looking but did not know the exact status as his work emails were not working. The Applicant also asserts that Mr Bartlett told him that TAMS would buy the shares of MIPEC and “take the lot”. Further, the Applicant asserts that he asked Mr Bartlett about whether his role would continue, and that Mr Bartlett told him that it would and that “we won’t do anything for three months until we see how it goes.” The Applicant did not know Mr Bartlett and took issue with his private contact details being provided to Mr Bartlett.

[30] Also on 16 January 2019, Ms Beeson emailed the Applicant advising that an appointment would be arranged in Brisbane to assess his fitness for work and apologising that she did not know that the Applicant was in Brisbane. The email also stated that once a report from the physician in relation to the Applicant’s fitness for work was received, a time to meet with him would be arranged to discuss his claim for back pay and to carry out an audit in relation to his superannuation. On 17 January 2019 Ms Beeson sent a further email to the Applicant stating:

“I understand that Lee [Bartlett] has advised you of the status of the ownership of MIPEC? Lee has instructed me to continue to work with you in relation to your fitness for work assessment and to that end I will be in touch shortly with further details.”

[31] The Applicant states that there were media releases and coverage in relation to TAMS purchase of MIPEC on 22 and 23 January 2019. The Applicant did not tender these. On 29 January 2019 the Applicant received an email from Ms Beeson stating that notwithstanding the previous position, TAMS/MIPEC had “revised the situation” and would only require a fitness for work clearance from the Applicant’s GP. The letter stated that when the fitness for work clearance was received, a return to work plan/travel logistics would be discussed. The letter concluded by stating:

“Unfortunately if we do not receive the fitness for work clearance within a reasonable time frame we will need to make further decisions regarding your absence.”

[32] In his evidence to the Commission, the Applicant queried the urgency of the email and pointed out that two weeks had already elapsed between the email stating the Company would arrange a medical appointment for him and the email advising that he could provide a clearance from his own doctor. On 6 February 2019, the Applicant provided a medical certificate clearing him to return to his normal duties with immediate effect. On 8 February 2019 Ms Beeson responded advising that contact would be made with the Applicant “shortly” and that a return to work plan/dates and logistics would be dealt with. On 12 February 2019 Ms Beeson again emailed the Applicant advising that she had conducted a conference with the management team at TAMS/MIPEC and that documentation was currently being prepared in relation to the Applicant’s “ongoing employment”.

[33] At some point in February 2019 TAMS acquired MIPEC. The evidence of Mr Bartlett in relation to the acquisition is that in February 2019 TAMS Group purchased 65% of the issued share capital of WBT Holdings Pty Ltd which owned 100% of the share capital of MIPEC. As a result, through direct ownership TAMS Group became the legal majority shareholder of MIPEC, thereby “inheriting” all of MIPEC’s assets and liabilities. During the same period, the TAMS Group also acquired another Company called Taylored Offshore Solutions. Mr Bartlett states that: “all three companies were merged at the same time increasing the number of employees from 260 to 400.”

[34] Instead of the return to work plan alluded to by Ms Beeson in her earlier correspondence, the Applicant received a letter from Ms Beeson dated 13 February 2019, in the following terms:

“The purpose of this letter is to confirm the outcomes of a recent organisational review by MIPEC (your employer) of its operational requirements and what this means for you.

We are writing to you to advise you of recent changes at MIPEC that have effected your position as Manager – Marine at MIPEC.

As you are aware, MIPEC was recently purchased by TAMS Group. TAMS and MIPEC have now merged their operations and TAMS have taken over the day to day commercial and operation management of MIPEC.

This has resulted in a restructure of roles and responsibilities and we are now writing to regrettably advise you that your position as Manager – Marine no longer exists under the new structure.

The position of Manager – Marine Division no longer exists and this position is redundant due to the acquisition of MIPEC and the merging of TAMS and MIPEC. The M&A resulted in two similar positions and the position of Manager – Marine is no longer required.

The Company has also given consideration as to whether it is reasonable in all of the circumstances to redeploy you into any vacancies within the Company as required by the Fair Work Act 2009.

TAMS can now confirm that there is a vacancy available for you and that vacancy does not change your pay or base location and therefore it is TAMS view that it is acceptable reasonable redeployment.

An employer does not have to pay statutory redundancy pay to an employee whose position has become genuinely redundant if the employer obtains ‘other acceptable employment for the employee’.

It is TAMS view that the role of Marine Supervisor is comparable, alternative and acceptable redeployment and confirm that your pay and location will not change. The role will report to Jason Hodgson.

If you wish to accept this redeployment opportunity please confirm with us as soon as practical….”

[35] The letter concluded with an invitation for the Applicant to contact Ms Beeson should he wish to provide feedback or raise alternative proposals. Ms Beeson signed the letter as “HR Consultant for TAMS/MIPEC and on behalf of Dyon Pilmoor Managing Director Total AMS Pty Ltd”. The Respondent tendered a document headed “Functional Description – Supervisor Port Services” said to have been attached to the letter dated 13 February 2019 (incorrectly referred to in the Respondent’s submission as having been dated 14 February 2019). It is immediately apparent that the title of the Functional Description differs from the position referred to in the letter. Further the Functional Description says nothing about the terms and conditions of employment attaching to the position.

[36] Other than the covering letter containing a statement that the offered position does not change the Applicant’s base pay or location, there are no terms and conditions of employment set out in the letter, and neither does it state that the Applicant’s service with MIPEC will be recognised by TAMS. A follow up email was sent by Ms Beeson to the Applicant on 19 February 2019 in relation to the letter and the position description seeking confirmation that these had been received and informing the Applicant that “consultation” was sought with him.

[37] The Applicant said that this conduct caused him to lose trust in the Respondent. From the Applicant’s perspective, Ms Beeson made contact with him without MIPEC providing a “heads up” that Ms Beeson had been engaged and would be in touch. The Applicant’s loss of trust increased when he received the redundancy letter. The Applicant said that he had been discussing a return to work and had been informed by Mr Bartlett that his position would not change for at least three months. The Applicant said that the redundancy letter came as a shock to him. Further the Applicant pointed to the lack of consultation prior to the decision of TAMS that his position was redundant.

[38] After receiving the redundancy letter, the Applicant engaged the services of Industrial Relations Claims. A series of correspondence between Industrial Relations Claims and Ms Beeson ensued. On 21 February 2019, Industrial Relations Claims on behalf of the Applicant corresponded with Ms Beeson asserting that the alternative role was not comparable and was a demotion and raising issues about the lack of reference to a Company car and the failure to mention short term performance incentives that the Applicant had received with MIPEC. The correspondence also queried the amount of time that the Applicant would be required to spend in Gladstone if the Applicant accepted the alternate position. The letter went on to state that the Applicant accepted that he had been made redundant and requested advice of the date of the redundancy and when the Applicant could expect a redundancy payment. The letter concluded by stating that the Applicant would defend any application under s.120 to vary his redundancy payments and seek his costs in relation to such application.

[39] Ms Beeson’s response sent by email on 25 February 2019 advised that she will seek instructions from her client and revert as quickly as possible. Ms Beeson also stated that it was very surprising that the Applicant had not consulted with his employer prior to engaging the services of Industrial Relations Claims and stated her expectation that before accepting that he was to be made redundant, the Applicant would have asked his employer questions about his entitlements rather than making automatic assumptions. Ms Beeson goes on to point out that previous correspondence from TAMS did not mention that the Applicant’s vehicle was to be returned or that he was not entitled to incentives.

[40] On Tuesday 5 March 2019 Ms Beeson again corresponded with Industrial Relations Claims stating:

“I have now spoken with Lee Bartlett who is the Chief Financial Officer at TAMS Group. As you are aware, TAMS Group have recently acquired MIPEC and have full management responsibility for MIPEC.

There is very clear evidence on the basis of the acquisition that there has been significant restructuring of the workforce.

Simon’s role is redundant as TAMS have appointed Scott McDonald who is a long standing and long term TAMS manager and senior leader into the role of operations manager MIPEC.”

[41] The email went on to assert that the Applicant had been offered an alternative role and that its terms and conditions and its responsibilities were not dissimilar or less favourable. It was also asserted that the Applicant had: “falsely assumed in the absence of ignoring the opportunity to consult with TAMS / MIPEC” that he would lose certain entitlements. The Applicant was invited to formalise in writing that he did not wish to consult with TAMS/MIPEC and did not wish to discuss some of the claims in the email from his representative Industrial Relations Claims.

[42] On 8 and 12 March 2019 Ms Beeson sent further emails seeking a response from the Applicant. The second email stated that if a response was not received within 48 hours further decisions would be made on the basis of available information. The subject matter of the emails was: “MIPEC / TAMS Redundancy of client Mr Simon Gravenall”. On 18 March 2019 Ms Beeson again corresponded with the Applicant (on TAMS letterhead). That correspondence relevantly stated:

“We confirm that you were advised on 13 February 2019 that the TAMS Group had acquired your employer MIPEC and your position as Marine Manager at MIPEC no longer existed.”

[43] The letter goes on to assert that a significant effort had been made by TAMS Group to discuss the acquisition of MIPEC and the Applicant’s role as Manager – Marine and that the Applicant had been advised that: “TAMS Group would make an offer of employment to you.” The letter further states that the Applicant was advised that: “the offer of employment would be on terms and conditions substantially similar to and considered on an overall basis to be no less favourable than the role of Marine Manager”.

[44] It is further stated that the Applicant was invited to consult with “us” to raise matters, ask questions and raise alternative proposals. The letter also states that the Applicant’s representative has informed “us” that the Applicant has a view that he has not been offered any role and goes on to state:

“Our correspondence clearly evidences the fact that you have been offered alternative employment with TAMS Group and that TAMS Group will recognise your service with MIPEC.

We will refer your advisors to s. 122 of the Fair Work Act which relates to the transfer of employment situations that affect the obligation to pay redundancy pay.

An employee is not entitled to redundancy pay if an employee rejects an offer of employment made by another employer on terms and conditions substantially similar to and considered on an overall basis, no less favourable than the employee’s terms and conditions with the first employer immediately before the termination and recognises the employee’s service with the first employer.

If you reject TAMS Group’s offer of employment I confirm that you are not entitled to statutory redundancy entitlements.”

[45] The letter concluded with a request that the Applicant advise whether he rejected the offer within 48 hours and indicated that TAMS would like the Applicant to commence work in the week commencing 28 March 2019. The letter is signed by Ms Beeson as HR Consultant for TAMS Group and on behalf of the Managing Director of TAMS Group.

[46] On 25 March 2019 Ms Beeson again corresponded with the Applicant (on TAMS letterhead) stating that TAMS/MIPEC wish to make a formal offer of employment to Mr Gravenall and stating that while his title might change his salary, terms and conditions and other benefits would remain the same. The letter went on to state:

“We have reviewed your previous employment contract and the changes to the original employment contract made on 2 November 2016 and confirm that the following terms and conditions of employment will continue:

  • This is a Brisbane based position however your work will entail frequent travel to Gladstone and other workplaces.
  • Travel to and from Brisbane will be paid by TAMS/MIPEC.
  • You will be invited to participate in any MIPEC STI/LTI plans as per the company’s policies
  • You will continue to have use of the company vehicle for business and private use.”

[47] The Applicant was requested to attend a meeting with Mr Bartlett, the CFO of TAMS and “owner of the Human Resource Function.” Ms Beeson signed that letter in the capacity of HR Consultant TAMS/MIPEC.

[48] On 26 March 2019, Mr Heffernan of Industrial Relations Claims on behalf of the Applicant corresponded with Ms Beeson by email. In that email it is disputed that an offer to employ or redeploy Mr Gravenall that can be assessed as suitable alternative employment has been made. The email goes on to assert that:

“5. Whether our client is a transferring employee or has already transferred is for another time.

  1. However, for the purpose of this correspondence only, even if our client accepts s.122 of the FWA has relevance, this section requires our client to assess the offered role as being “on terms and conditions substantially similar to, and, considered on an overall basis, no less favourable than, the employee’s terms and conditions of the employment with the first employer immediately after termination.
  2. Our client has repeatedly made it clear that he does not view the so called ‘offered’ role as being no less favourable.
  3. It is incumbent on your client to clearly articulate the redeployment or alternative employment.
  4. In any event s.120 of the FWA compels the employer to make an application to the FWC, so your client’s position ‘If you reject TAMS Group’s offer of employment I confirm that you are not entitled to statutory redundancy entitlements’ is misconceived, as that is a matter for the FWC to determine, not your client and only after your client makes the application.
  5. Given your own correspondence clearly demonstrates that there is no clarity on the role, the location, the remuneration or the fringe benefits (or tool of trade), with respect, any Application to be relieved from paying a statutory redundancy is doomed to fail.
  6. Then of course the question of continuity of employment remains live.
  7. We await a formal offer of our client to be redeployed as he cannot reject or accept an offer that is so vague and imprecise as to be meaningless.”

[49] On 26 March 2019 Ms Beeson responded to Mr Heffernan disputing matters set out in his email and maintaining that a formal offer of suitable alternative employment had been made to the Applicant and that in the interests of good faith and to remove any perceived vagueness or ambiguity TAMS would again present its formal offer and give the Applicant a further period until Friday 22 March to accept it and make arrangements to report to work on 1 April 2019. The date for response to this letter is an error and the intention was to give the Applicant until Friday 29 March to accept the offer. The email again requested that the Applicant attend a meeting with Mr Bartlett on 1 April 2019 and concluded as follows:

“If your client has not accepted the offer by Friday your client is further advised that TAMS will make arrangements with him to collect his motor vehicle and no further discussions regarding this offer will be held.

We respect your client’s view that he has not been offered employment that is no less favourable however TAMS do not share your client’s view and as such this clearly will be a matter for the Fair Work Commission to determine and decide notwithstanding the above, we will today commence the application with the Fair Work Commission.”

[50] Documents said to be a formal offer of employment were sent to the Applicant by Ms Beeson on 29 March 2019 and he was requested to advise a time on 1 April when he would be available to meet with Mr Bartlett. The formal offer of employment was set out in a written contract of employment dated 25 March. Significantly the contract provided at 3(e) that:

“The Executive’s continuity of service with the Company will be unaffected by the execution of this Contract and for the purposes of calculating any accrued entitlements they shall be calculated from the date the Executive commenced employment with the Company.”

[51] The Applicant said in his evidence that it was unclear which Company was being referred to in clause 3(e) of the contract and he required further legal advice about this point. The Applicant also pointed to the absence of a number of previous entitlements in the contract including incentives (which he had been specifically informed by TAMS would continue) and changes to other conditions of his previous employment including non-compete clauses and travel arrangements.

[52] On Monday 1 April Ms Beeson again emailed the Applicant stating that he had not responded to the formal offer of employment or the request to meet with Mr Bartlett. The email from Ms Beeson also pointed out some errors in the employment contract in that it referred to Western Australia with respect to long service leave and restraint and advised that these would be corrected. The email concluded by asking the Applicant to advise of his decision in relation to the contract of employment and advising that if the offer was not accepted Mr Bartlett wished to make arrangements to collect the Applicant’s company vehicle while he was in Brisbane.

[53] Mr Gravenall responded with an email in the following terms:

“Jodie/Lee

Jodie: You have answered your query in your email of 26/03/2019

‘If your client has not accepted the offer by Friday your client is further advised that TAMS will make arrangements with him to collect his motor vehicle and no further discussions regarding the offer will be held’

Please note: No agreement to meet Lee at 1 PM today was ever made.

I accept TAMS/MIPEC have made me redundant.

Lee: The vehicle is on the road and can be collected prior to 5PM as I have an appointment scheduled. I will need you to sign for it to prove to both parties it has been collected and any future traffic infringements that are issued.

Thank you

Simon”

[54] Mr Bartlett then emailed the Applicant requesting confirmation of the address from which the car could be collected and stating that he was sorry that the Applicant did not want to accept the position being offered to him with the TAMS Group. The Applicant asserted, and it is not disputed by TAMS, that he was paid accrued leave entitlements but was not paid notice on termination of his employment or redundancy payments, albeit undertakings were given to correct this. Mr Bartlett’s evidence oral evidence at the hearing was that he could have “reassured” the Applicant about these matters if the Applicant had met with him as requested.

[55] On 4 April 2019, TAMS applied under s. 120 of the Act to vary redundancy pay to which it was said that the Applicant was entitled under s. 119 of the Act, on the basis that TAMS asserted that the Applicant had been offered a role with terms and conditions that are identical to and no less favourable than the terms and conditions he enjoyed when employed by MIPEC.7 The s. 120 application was filed by TAMS not MIPEC, and the submissions in support of that application make extensive reference to the provisions in s. 122 of the Act. The s. 120 application was allocated to another member of the Commission who issued Directions for the filing and service of material. After the material was received, the Associate to the Member of the Commission who was dealing with the s.120 application corresponded with Ms Beeson and Mr Gravenall on 20 May 2019 indicating the views of the Member it was unclear how an application under s. 120 of the Act could be treated as an application under s. 122. The correspondence also pointed out that it was unclear how s. 122(4) of the Act might give standing to an employer to make an application. The correspondence concluded by requesting that TAMS confirm whether it wished to proceed with the s. 120 application.

[56] On 22 May 2019 Ms Beeson responded advising that TAMS had taken legal advice and held the view that s. 120 was not relevant and that its legal advisor agreed that TAMS did not have standing to make an application under s. 122 of the Act and that only Mr Gravenall had standing to make such an application. TAMS also asserted that “it is strongly arguable” that s. 122(3) applies and TAMS could rely on that section in not making a redundancy payment to Mr Gravenall under s. 119 of the Act. The correspondence confirmed that TAMS wished to withdraw the s. 120 application and attached a notice of discontinuance. The correspondence also stated that it was up to Mr Gravenall to decide whether he wished to make an application under s. 122(4) of the Act. Mr Gravenall’s case was later taken up by the Fair Work Ombudsman and TAMS reiterated that its advice from a workplace relations solicitor is that s. 120 of the Act was not relevant and that s. 122 applied.

[57] Faced with the position of TAMS, Mr Gravenall made an application under s. 122(4) of the Act. In correspondence to the Commission in relation to the s. 122(4) application, Mr Gravenall stated that redundancy pay is overdue and that the conduct of TAMS is vexatious. I assume from Mr Gravenall’s correspondence to the Commission in relation to that s. 122(4) application that Mr Gravenall made it reluctantly and on the basis that it appeared that this was the only way to move the matter forward.

[58] Mr Bartlett’s evidence was that he discussed with Ms Beeson the Marine Services Supervisor role and the hours of work, salary, travel and location associated with that role. Mr Bartlett states that he and Ms Beeson agreed that the terms and conditions offered to the Applicant were “not unfavourable or dissimilar”. Mr Bartlett also states that he wished to meet with the Applicant to explain to him the organisation structure and how he would fit into it and that the Applicant rejected both of Mr Bartlett’s offers to meet.

[59] Mr Bartlett rejected the Applicant’s view that the role offered by TAMS was substantially different than his former role with MIPEC and maintained that the Applicant would not know what the organisation structure looks like as he had refused to consult with Mr Bartlett or Ms Beeson about this matter. Mr Bartlett also said that he had reviewed the Applicant’s offer and the hous of work, seniority, fringe benefits, workload, job security, continuity of employment, location, travel and required skills and experience, and maintained that these are no different to the Applicant’s previous role.

[60] Further, Mr Bartlett said that the Applicant was making a mistake by basing his assumptions on what MIPEC did rather than what TAMS does and that the Applicant did not know what TAMS does because he refused to discuss the role. According to Mr Bartlett, if the Applicant had been willing to consult he may have formed a different view. It is Mr Bartlett’s strong view that if the Applicant had been willing to discuss the role he would not have rejected it and that other changes may have been made to his satisfaction.

CONSIDERATION

[61] After considering the evidence I am satisfied, in all of the circumstances of this case, that that s.122(3) operates unfairly to the Applicant in all of the circumstances of this case for the following reasons. Firstly, I am of the view that the Applicant’s personal circumstances at the time of the acquisition of MIPEC by TAMS were not properly considered by management of TAMS or MIPEC which had been acquired by TAMS. I accept that TAMS acquired MIPEC and took over its operations in difficult circumstances following the death of MIPEC’s director. I also accept that senior managers of MIPEC were heavily engaged in ensuring that MIPEC survived the changes for the benefit of all employees, rather than focusing on one particular employee. I have taken these matters into account.

[62] However, notwithstanding the difficulties faced by Mr Bartlett and other senior managers of TAMS, it remains the case that the Applicant’s personal circumstances were not given reasonable consideration. The Applicant had been absent from the workplace for an extended period which was in excess of eight months at the time that TAMS acquired MIPEC. This meant that the Applicant was out of the loop with respect to the changes associated with the acquisition of MIPEC by TAMS.

[63] Other than a telephone call from Mr Bartlett on 16 January 2019 in which the possible acquisition was discussed, there was no communication with the Applicant about the changes relating to his employer, MIPEC. The first contact the Applicant had in the leadup to the acquisition was a letter from Ms Beeson informing him that his employment was in jeopardy due to his extended absence. The Applicant did not know who Ms Beeson was and was not given an introduction, or an advance warning that she would be in contact. It was not unreasonable for the Applicant to take a dim view about the manner in which this contact was made and the tone of the correspondence which essentially threatening the Applicant’s future employment.

[64] It is also the case that once Ms Beeson established contact with the Applicant, the tone of her communications with the Applicant about his return to work, left much to be desired. The correspondence from Ms Beeson to the Applicant contained factual inaccuracies – such as the assumption that the Applicant was located in Gladstone – and the time it took to advise the Applicant that TAMS would accept a certificate from the Applicant’s treating medical practitioner was unreasonable.

[65] There was also no reasonable explanation in the Respondent’s evidence or submissions about why it took so long to resolve the Applicant’s fitness for work. In any event, the Applicant had complied with the request for a clearance from his treating medical practitioner on 6 February 2019. Why the Applicant could not have returned to work and had discussions about the proposed changes to his role after such return was not explained by the Respondent in its evidence or submissions and there does not appear to be any legitimate basis for the Applicant not being allowed to return to work when he was cleared.

[66] It appears that the Applicant was left in limbo after being informed that steps were being taken to arrange his return to work and in circumstances where he had complied with the request for a clearance. Even the manner in which the clearance from the Applicant’s doctor was requested by Ms Beeson – under threat that failure to comply within a reasonable time could result in termination of the Applicant’s employment – was unnecessarily aggressive. This was particularly so in circumstances where there was a two-week delay in the Applicant being informed (contrary to previous advice) that a clearance from his own doctor would be accepted. In short, whatever had transpired previously, the delay at this point was occasioned by the Respondent.

[67] It is also the case that the Applicant was given undertakings that he would be returning to work. Ms Beeson’s correspondence made this clear and Mr Bartlett did not dispute the Applicant’s evidence that he told the Applicant that there would be no changes to his role for at least a three-month period.

[68] In light of that evidence, I accept the Applicant’s evidence that the redundancy letter took him by surprise. In my view TAMS/MIPEC failed to give proper consideration to the Applicant’s circumstances when communicating with him in relation to the acquisition of TAMS by MIPEC. The timing of the redundancy letter, coming immediately after correspondence about the Applicant’s return to work after his period of incapacity, can only have contributed to the general antipathy he developed towards managers of TAMS. It was reasonable for the Applicant to seek advice from an industrial relations practitioner about his circumstances. This was particularly so when the only contact he had received were from TAMS personnel whom he did not have a working relationship with, due to his lengthy absence.

[69] Secondly, I am of the view that the correspondence engaged in by the Respondent’s Human Resources Consultant about the role the Applicant was offered with TAMS, was confusing. The early correspondence dealt only with the duties that the Applicant would be performing in the new role. Other than general statements that his salary and conditions would be maintained, there was no detail about the terms and conditions of employment that the offer was based on. Notwithstanding the lack of detailed information about the terms and conditions attaching to the role offered to the Applicant, the Respondent’s Human Resources Consultant consistently maintained that an offer of alternative employment on terms that were not less favourable had been made.

[70] Notably, in the barrage of correspondence sent to the Applicant by the Respondent’s Human Resources Consultant, there is no clear statement, directed to the Applicant, informing him that his service with MIPEC would be recognised by TAMS. The only statement addressing recognition of service is found in the Respondent’s correspondence to the Applicant dated 18 March 2019, in which it is stated that: “Our correspondence clearly evidences the fact that you have been offered alternative employment with TAMS Group and that TAMS Group will recognise your service with MIPEC.” If there was such correspondence it was not in evidence in these proceedings.

[71] Further, a written contract of employment for the Marine Supervisor’s position was not provided to the Applicant until 25 March 2019. It is surprising that this document was not provided at an earlier time as it could have formed the basis for a discussion. As it was, the written contract was provided less than a week prior to the deadline for the Applicant to accept the offer of employment. The written contract was unclear in relation to the significant matter of recognition by TAMS of the Applicant’s previous service with MIPEC. There were other factual inaccuracies in the contract and it did not contain provision for incentive payments which the Applicant had been informed he would be entitled to in accordance with MIPEC’s policy. Further, there were some substantive changes to the Applicant’s previous contract in relation to post-employment restraint.

[72] It is unsurprising that the late provision of a contract with significant omissions and lack of clarity, further impacted on the Applicant’s mistrust. It is also the case that given the late provision of the contract, and the deadline for its acceptance, the Applicant did not have an opportunity to seek legal advice about the contract. In my view this was unfair and unreasonable and would have cemented the Applicant’s view that there was no real attempt being made to offer alternative employment to him.

[73] Thirdly, the correspondence from the Respondent’s Human Resource Consultant to the Applicant setting out the Company’s views about the Applicant’s entitlement to redundancy payments was also confusing. In short, the correspondence conflated sections 120 and 122 of the Act. The correspondence about the position offered to the Applicant employs the terminology in s. 120 stating that it is “acceptable alternative employment”. The correspondence evidences a lack of understanding of the fact that if s. 122(3) applied then s. 120 had no relevance to the Applicant’s entitlement to redundancy payments. It is also apparent that the Respondent’s Human Resources Consultant did not give any consideration to whether there would have been a transfer of employment if the Applicant accepted the position and the necessity that his service with MIPEC would be recognised in order for s. 122(3) to apply. The failure to consider this significant point is evidenced by the failure to clearly and unequivocally advise the Applicant of the recognition of his service.

[74] Fourthly, the Respondent – through Ms Beeson – compounded the confusion by making an application under s. 120 of the Act to reduce the Applicant’s redundancy payments. Such an application is predicated on the Applicant being entitled to redundancy payments and is at odds with the Respondent’s position that s. 122(3) applies so that the Applicant is not entitled to redundancy payments.

[75] Further, an application under s. 120 for a reduction in redundancy payments to which an employee is entitled under s. 119 of the Act, can only be made by the entity obligated to pay the redundancy payments. In the present case, the application under s. 120 was made by TAMS in circumstances where TAMS had never employed the Applicant and had no obligation to pay him redundancy payments under s. 119. The Applicant was put to the cost and effort of defending an application which was misconceived. In short, the application under s. 120 should not have been made, and even if it could be made, the application should have been made by TAMS not MIPEC.

[76] I do not accept that it would be unfair to visit the mishandling of Applicant’s situation by the Respondent’s Human Resources Consultant, on the Respondent. Ms Beeson had ostensible authority to conduct matters involving the Applicant on behalf of both TAMS and MIPEC. Further, a number of Ms Beeson’s communications with the Applicant specifically referred to Mr Bartlett authorising matters contained in that correspondence and indicate that Ms Beeson had actual authority to conduct these matters on behalf of the Respondent. The Respondent is a large and well-resourced organisation with access to human resource management and legal advice. The misconceptions about the legislative provisions and their effect set the tone of the correspondence with the Applicant. While the Applicant was represented for part of the dealings with the Respondent, the Respondent’s Human Resources Consultant failed to engage with points made by the Applicant’s representative. In particular the significance of whether there had or would be a transfer of employment was pointed out, as was the fact that if s. 120 applied, the question of whether alternative employment was accepted was a matter to be determined by the Commission and not by the Respondent. In my view, the repercussions of incorrect advice and mishandling of the Applicant’s case by the Respondent’s Human Resources Consultant should be visited to a greater degree on the Respondent than on the Applicant.

[77] Balanced against the mishandling by the Respondent’s Human Resources Consultant of matters concerning the Applicant’s employment and his dismissal, is the Applicant’s attitude in his dealings with TAMS. It appears that the Applicant adopted a “head in the sand” approach to returning to work, by refusing to meet with the Respondent’s representatives. Notwithstanding the errors and inconsistencies in the manner in which the Respondent dealt with the Application and the Applicant’s case, I am satisfied that the applicant’s refusal to meet with management of TAMS was unreasonable. Had the Applicant put his chagrin about the manner in which he had been treated by the Respondent and its Human Resources Consultant to one side, he may have been able to negotiate a satisfactory outcome to his concerns by having a discussion with Mr Bartlett. Accordingly, I have adjusted the Applicant’s redundancy payments by 25% to reflect the unreasonableness of his conduct.

CONCLUSION

[78] In all of the circumstances I am satisfied and find that s. 122(3) operates unfairly to the Applicant and that he should receive 75% of the redundancy payments prescribed in clause 119 of the Act. It follows that I have discounted the amount required to be paid by the Respondent by 25%. But for s. 122(3) the Applicant would have been entitled to 12 weeks redundancy pay comprising 11 weeks based on his six years of service and an additional week because he was over the age of 45 at the time of dismissal. Applying the 25% discount, the amount of redundancy payment I have determined is nine weeks pay.

[79] I direct the Respondent to calculate the amount of redundancy pay based on 9 weeks, including taxation according to law (which I assume will be on the basis that the payment is a bona fide redundancy payment), by 4.00 pm on Monday 31 August 2020 and to advise the Commission and the Applicant in writing of the amount and the basis of the calculation. The Applicant is to confirm by 4.00 pm on Thursday 3 September 2020, whether he accepts that the calculation is correct. If the Applicant takes issue with the calculation of the redundancy payments, the matter will be relisted. Otherwise, an order requiring the payment of that amount by MIPEC within 14 days will then issue.

[80] The order will be made against MIPEC and TAMS jointly given that my request for clarity in relation to the status of MIPEC made in my Decision of 19 March 2020, has not been addressed with sufficient clarity for me to ascertain the current status of MIPEC other than it has been “merged” into TAMS so that TAMS has inherited its obligations.”

Transfer of employment situations that affect the obligation to pay redundancy pay – Gravenall – [2020] FWC 4499 – 26 August 2020 – Asbury DP