Employer’s failed attempt to avoid redundancy pay on grounds of obtaining other acceptable employment for employees

Introduction

In an appeal to a Full Bench of the FWC, a labour hire company (the Company) that lost a particular contract and argued it had obtained other acceptable employment for employees with the incoming provider (Programmed) was unsuccessful in having its redundancy pay obligations reduced to nil.

Legislation

Section 120 of the Fair Work Act 2009 (Cth) (the Act) provides that on application by an employer  the FWC may reduce an employee’s NES redundancy pay entitlement to a specified amount (which may be nil) that the FWC considers appropriate where:

• an employee has a NES redundancy pay entitlement; and
• the employer obtains other acceptable employment for the employee (which is what the Company argued in this case) or the employer cannot pay the amount.  

Case law

In the Full Bench decision, the Full Bench discussed a Full Federal Court case in which the Full Federal Court found, “to obtain employment for an individual means to procure another employer to make an offer of employment, which the individual may or may not accept as a matter of his or her choice.”

The Full Bench found that:

• “an employer “obtains” other acceptable employment when it acquires or gets the employment by its conscious, intended acts”; and
• “the mere facilitation of employment is insufficient”.

Reasoning of the Full Bench of the FWC

The Full Bench of the FWC declined to grant permission to appeal Commissioner Cambridge’s decision at first instance. The Full Bench agreed the Company had not obtained other acceptable employment for the employees with the incoming provider, even where several employees ultimately were offered and accepted employment with the incoming provider.

The Full Bench’s reasoning included:

• The 30 September and 1 October 2021 employee communications “simply advised employees of the date and time at which Programmed would be facilitating information sessions and directed the employees to the Programmed website to identify for themselves the available roles and the manner in which they could express an interest in being considered for these roles.” There was no evidence the Company was aware of whether the “…employees had been offered employment by Programmed, or the terms and conditions which attached to any such offer”.
• There was no evidence the Company conferred with Programmed about any of the “…employees such that it could be said that its actions procured or acquired their employment.” While the Company’s Chief People Officer offered to provide Programmed with a letter detailing the relevant employment history, skills and performance of its employees, this invitation was not taken up by Programmed.
• The Company merely producing a list of employee names and the transition of certain training records and medical information to Programmed was, of itself, entirely insufficient to satisfy the requirement in s.120 of the Act. 

Key take-aways

This case is an important reminder for employers of the threshold when seeking to reduce a redundancy payment on this basis and to consider obtaining legal advice early on in an attempt to ensure that the requirements in s.120 are satisfied.   

Ready Workforce (A Division of Chandler Macleod) Pty Ltd t/a Chandler Macleod v Andrew Lowe, Bernard McIntyre, David Lindsay, Glenn Munro, James Eason, Johnathon Barbara, Mark Keller, Robert Snelgrove, Scott Ditchfield, Scott McFarlane, Timothy Farrow [2022] FWCFB 173 (30 September 2022)

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National Workplace Lawyers

Note — this is for information purposes only and does not purport to be comprehensive or to render legal advice.