An Employ­ee’s Com­mute Thwarts an Employ­er Com­mut­ing Redun­dan­cy Pay

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 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:

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).