WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

CITATION : 2016 WAIRC 00400

DELIVERED : THURSDAY, 30 JUNE 2016

FILE NO. : M 113 OF 2015

CLAIMANT

AND

AEG Ogden (Perth) Pty Ltd ABN 67 084 272 088

RESPONDENT

Catchwords : Claim for redundancy entitlement allegedly owed – Fair Work Act 2009 – Small claims procedure – Whether the claimant is by reason of her conduct estopped from claiming a redundancy benefit or other compensation – Whether the claimant was made redundant.

Legislation : Fair Work Act 2009

  Perth Theatre Trust Act 1979

Cases(s) referred to
in Reasons : Hodgson v Amcor Ltd; Amcor Ltd v Barnes
  [2012] VSC 94
   Purdon v The Ascent Group Australia Ltd T/A The Ascent Group
   [2012] FWA 2495
   Jones v Department of Energy and Minerals
   (1995) 60 IR 304

Result : Claim proven

Representation:

Claimant : In Person

Respondent : Mr J Hollindale, lawyer employed by the respondent appeared as of right pursuant to s 548(7) of the Fair Work Act 2009.

REASONS FOR DECISION

1         Ms Lorraine Rice (the claimant) alleges that her former employer AEG Ogden (Perth) Pty Ltd (the respondent) has, by failing to pay her a redundancy payment, contravened s 119 of the Fair Work Act 2009 (FW Act).

2         The respondent denies that the claimant was made redundant. In the alternative, it says that she is estopped by reason of her conduct from recovering a redundancy entitlement or other compensation.

Undisputed Facts

3         The Perth Theatre Trust (PTT) is a body corporate established by the Perth Theatre Trust Act 1979.  It manages and operates theatres vested in or leased to it.

4         The respondent was at all material times in the business of venue management.

5         In February 1999, the PTT entered into a venues management agreement (management agreement) with the respondent’s predecessor Ogden International Facilities Corporation (Perth) Pty Ltd (see exhibit 24). The management agreement provided that the respondent’s predecessor would manage the PTT venues of His Majesty’s Theatre, Perth Concert Hall (PCH), State Theatre Centre of Western Australia (STCWA), Subiaco Arts Centre and the Albany Entertainment Centre.

6         The claimant commenced employment with Ogden International Facilities Corporation (Perth) Pty Ltd on 17 September 2001. She was initially employed as a personal assistant to the general manager but was subsequently promoted to various other positions. On or about 1 July 2010 she was appointed as operations manager of the STCWA and entered into a new contract of employment with the respondent with respect to that position (see exhibit 2)

7         On or about 11 April 2014, the respondent announced that that the PTT would not be renewing the management agreement and that the PTT would self-manage its venues with effect from 1 January 2015.

8         On 6 May 2014, the respondent sent a letter to all staff informing them that the PTT and the respondent had set up a Joint Transition Committee (JTC) to facilitate the ‘transition and changeover’. In that letter the respondent’s executive director, Mr Roderick Pilbeam (Mr Pilbeam), advised that there was a possibility that the PTT might offer employment to the respondent’s staff working at PTT venues. Alternatively, staff would be paid appropriate compensation on termination of their employment at the end of the respondent’s management term. The respondent’s staff was informed that the JTC would manage all communications about PTT employment offers and that the respondent would continue to consult with staff concerning the changes.

9         On 19 May 2014, the respondent advised staff members that there would be a recruitment process adopted with a view to the PTT employing the respondent’s then current staff.

10      In about late July and/or early August of 2014, Ms Fiona Lealiifano (Ms Lealiifano), the respondent’s human resources co-ordinator, held individual meetings with staff members to discuss various issues including redundancy payments. The claimant attended such a meeting and was informed that should her position be made redundant, the respondent would pay her $16,603.80.

11      In late August 2014, the respondent’s staff was informed that they should use a particular process in order to gain employment with the PTT. Gaining employment with the PTT required that applications be made to the Department of Culture and the Arts. The positions to be offered were public service positions.

12      In about late September or early October 2014 the claimant, in conformity with the process instructed, applied for various positions offered by the PTT. She applied for the positions of manager of His Majesty’s Theatre, manager of the STCWA, assistant manager of His Majesty’s Theatre and assistant manager of the STCWA.

13      At the beginning of October 2014, the claimant was interviewed for the two manager positions for which she had applied, but was informed on 31 October 2014 that she had not been recommended for those positions. She was, however, informed that her applications for the other positions were still being assessed. She was never interviewed for those other positions.

14      On 7 November 2014, the claimant was informed by the PTT’s director of human resources as follows:

Dear Ms Rice

ASSISTANT MANAGER – HIS MAJESTY’S THEATRE, POSITION 13397, LEVEL 5, PERTH THEATRE TRUST, DEPARTMENT OF CULTURE AND THE ARTS

I am pleased to advise that you have been recommended for a three year fixed-term, full-time contract to the above position.

Under the provisions of the Public Sector Management (Breaches of Public Sector Standards) Regulations 2005, unsuccessful applicants have the opportunity to request a review of the selection process if they believe that the Employment Standard has been breached.

If any unsuccessful applicant wishes to lodge a breach claim they have until Thursday, 13 November 2014 to do so.

You will be contacted by this office at the conclusion of the breach period. If a breach claim is lodged it may be some time before the vacancy is finalised and your appointment offer confirmed. As your appointment is not yet confirmed, it is recommended that you do not take any action with your current employer at this stage.

…

15      On 14 November 2014, the claimant informed the PTT that she was withdrawing her candidature for the position of assistant manager of His Majesty’s Theatre.

16      On about 21 November 2014, Mr Rodney Phillips (Mr Phillips), chief executive of the respondent, wrote to the claimant as follows:

Dear Lorraine

CONFIDENTIAL

As you will be aware, the current Venue Management Agreement held by AEG Ogden (Perth) Pty Ltd (AEGOP) with the Perth Theatre Trust (PTT) will end on 31 December 2014.

The PTT is currently assessing its staffing requirements for the future operations of the venues. We understand PTT have not yet finalised those requirements and therefore a decision as to which AEGOP staff will be offered positions with PTT has not been made. It is expected that this will be finalised by November.

As a result, AEGOP confirms that it gives you 5 weeks’ notice of the termination of your employment in accordance with your current Contract of Employment, and that this notice will commence to operate from 26 November 2014. Upon the cessation of your employment on 31 December 2014, you will be paid any outstanding leave entitlements in accordance with the National Employment Standards (NES) and your Contract of Employment.

Additionally, in accordance with your AEGOP Contract of Employment you are also eligible for a redundancy payment if you are not offered a position with PTT; your expected redundancy entitlement will be 12 weeks of your usual weekly salary in accordance with the redundancy provisions of the NES. If you are offered a position with PTT then no redundancy entitlements will apply.

We will continue to communicate with you over the forthcoming weeks, as and when further information is available to us.

Please contact Fiona Lealiifano, Human Resources Coordinator should you have any questions regarding this advice.

I would like to thank you for your input and valued contribution to the operations of our business during your employment with AEGOP.

17      On 4 December 2014, the claimant informed Ms Lealiifano that she had not been offered a position with the PTT and therefore was looking to receive a redundancy payment on 31 December 2014.

18      On or about 22 December 2014, the claimant accepted a position with WA Venues & Events Pty Ltd (WAVE).  She was appointed to the position of deputy general manager of PCH. WAVE is unrelated to the respondent and the PTT.

19      On 24 December 2014, the claimant contacted Ms Lealiifano to enquire about her redundancy payment. Ms Lealiifano responded to the claimant advising that the respondent and the PTT were in discussions about the issue. Later that same day, the claimant received a letter in an email from Mr Phillips informing her that she was not entitled to a redundancy payment. In that letter Mr Phillips said inter alia:

As you have previously stated, you were not formally offered a position with PTT. This is because you withdrew from the recruitment process after receiving a letter of recommendation which stated that you were the preferred candidate, but before a formal contract of employment could be issued. You then accepted the position of Deputy General Manager with WASO at Perth Concert Hall (PCH).

There is an agreement between PTT, WASO and the Department of Culture and the Arts (DCA) for the management of PCH. The funding for PCH is conducted in the same way (through State Government Appropriation) as has been the case with the present arrangements between PTT and AEGOP. You are therefore transferring employment from AEGOP to an associated entity with PTT and are being employed on terms and conditions similar to your current employment.

AEGOP and PTT have discussed this matter extensively and have sought independent legal advice. Following this, I can now confirm that it’s been determined that you are not eligible for a redundancy payment on cessation of your employment with AEGOP for the reasons detailed above.

Mr Pilbeam

20      The respondent’s reason for not making the redundancy payment is largely encapsulated in what Mr Pilbeam told the court.

21      He asserted that cl 4 of the contract of employment (exhibit 2) provided that if the respondent’s management agreement with the PTT to operate the STCWA was not renewed, the claimant’s employment could be terminated on two weeks’ notice. Therefore, the claimant’s continued employment was dependant on the venue management agreement being renewed. Given that it was not renewed, the precondition for the continuation of the claimant’s employment was not satisfied and therefore the claimant is not entitled to a redundancy payment.

22      He observed also that the PTT elected to offer the claimant employment for the position of assistant manager at His Majesty’s Theatre with effect from 1 January 2015. He asserts that the annual remuneration for that position was more than the claimant received for working for the respondent. He says that the claimant’s failure to take up the position offered is crucial in light of what cl 12.3 of the management agreement (exhibit 24) provides.  It states:

12.3 Transfer of Employees at end of Term or earlier termination

The Manager acknowledges that, if this Agreement expired by effluxion of time and a new agreement is not entered into with the Manager, or this Agreement is otherwise terminated in accordance with the provisions of this Agreement, The Trust may retain the right to operate The Venues, itself or appoint a new manager for that purpose. In those circumstances the Manager further acknowledges that at the expiry or earlier termination of this Agreement, The Trust or its new manager will either offer employment to the Employees, other than the executive Employees, engaged in the operation of The Venues (which they may accept or reject at their individual discretion), or direct the Manager to properly terminate the employment of any such Employees, upon payment of the appropriate Compensation as a cost to The Trust.

23      Mr Pilbeam points out that the claimant is now working at the PCH another PTT venue which the respondent formerly managed.

Respondent’s Arguments

24      The respondent contends:

1. that the claimant’s position was not made redundant; and
2. if it was, which is denied, the claimant has thwarted being employed on remuneration terms more beneficial than those received whilst working for the respondent and is therefore estopped from claiming a redundancy benefit or any other compensation.

25      The respondent submits that the preconditions for the continuation of the claimant’s employment under her contract of employment were not satisfied after 31 December 2014, and the respondent was therefore entitled to terminate the claimant’s employment on two weeks’ notice. The claimant’s position was not made redundant. The position simply ended as a matter of fact and law when the management agreement ended.

26      In accordance with the management agreement, the PTT elected to offer the claimant the position of assistant manager at His Majesty’s Theatre with remuneration greater than that which the claimant received whilst working for the respondent as operations manager of the STCWA. Notwithstanding that offer, the claimant unilaterally disengaged from the recruitment process and declined the employment offered with effect from 1 January 2015. The claimant has not suffered a detriment because she was offered substitute employment with the PTT. The claimant, by her own election, removed herself from the recruitment process and is therefore estopped from claiming a benefit.

Determination

27      One of the main factual issues in dispute and that is whether the remuneration offered by the PTT with respect to the position of assistant manager at His Majesty’s Theatre was greater than that paid to the claimant by the respondent. Given that the respondent asserts that fact, the onus is on it to prove it.

28      The claimant’s evidence was that her overall remuneration package whilst working for the respondent was greater than that proposed by the PTT. I have no reason to reject her evidence in that regard or with respect to any other issue. The claimant gave credible evidence which is accepted. The respondent did not introduce any evidence concerning the proposed remuneration offered by the PTT. Simply put, the respondent has not discharged its evidentiary onus on that issue. I find that the claimant’s overall remuneration whilst working for the respondent was higher than that proposed by the PTT for the position of assistant manager at His Majesty’s Theatre.

29      There is one further factual issue which was the subject of some contention. That is whether the respondent committed to paying the claimant a redundancy payment of $16,603.80. In that regard, the claimant conceded under cross-examination that Ms Lealiifano told her that she would only be entitled to that amount should her position be made redundant. Ms Lealiifano did not commit the respondent to paying a redundancy payment. All she did was to advise the claimant that in the event that a redundancy payment was to be made, then she would receive $16,603.80.

30      Whilst on the issue of quantum of a redundancy entitlement, it appears that the respondent does not dispute the amount claimed. Its only issue is whether or not a redundancy benefit is payable.

31      I now turn to consider the relevant statutory provisions with respect to redundancy.

32      Section 119(1) of the FW Act provides:

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.

33      Section 121 of the FW Act provides for certain exclusions from the obligation to pay redundancy pay, however, those exclusions are not relevant in this matter.

34      Section 123 of the FW Act places some limits on the scope of s 119(1) of the FW Act. It states that some employees are not covered. Relevant to this matter, it provides in s 123(1)(a) of the FW Act:

123 Limits on scope of this Division

  Employees not covered by this Division

(1)    This Division does not apply to any of the following employees:

(a)    an employee employed for a specified period of time, for a specified task, or for the duration of a specified season;

35      Section 123(1)(a) of the FW Act is relevant to my considerations because of the respondent’s argument concerning the finite nature of the claimant’s employment.

36      Section 122 of the FW Act provides:

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.

37      The respondent’s argument that there has not been a redundancy is predicated on cl 4 of the contract of employment.  That provides:

4. Period of Employment

The Employee’s employment is ongoing, however is subject to regular review of business needs. Should the Employer’s Venue Management Agreement to operate the Perth Theatre Trust Venues not be renewed or the Employee’s position is no longer required for the efficient operation of the Perth Theatre Trust Venues, the Employee’s employment may be terminated with two (2) weeks notice.

38      The respondent contends that the precondition for the continuation of the claimant’s employment was not satisfied and therefore it was entitled to terminate the claimant’s employment.

39      It is axiomatic that the respondent was entitled to terminate the claimant’s employment in accordance with cl 4 of the contract of employment, however it does not follow that the employment of the claimant was anything other than ongoing. Indeed, cl 4 of the contract of employment expressly indicates that to be the case. It is the case that the claimant’s employment was not for a specified period of time, for a specified task, or for the duration of a specified season as required by s 123(1)(a) of the FW Act. All that cl 4 of the contract of employment does is to provide a particular mechanism for termination in the event of the management agreement not being renewed.

40      It is clear that the claimant’s employment was terminated at the respondent’s initiation because the respondent no longer required the job done by the claimant to be done by anyone.

41      In Hodgson v Amcor Ltd; Amcor Ltd v Barnes [2012] VSC 94 Vickery J held that the common law concept of redundancy comes down to the following propositions:

(a)    A job becomes redundant when the job of the employee ceases to exist because the employer, for whatever reason, whether by reason of reorganisation, mechanization, change in demand or other reason, no longer desires to have it performed by anyone;

(b)    This can occur either when the role no longer exists or the duties have so changed that for all practical purposes the original role no longer exists;

(c)    However, redundancy is not limited to the circumstance whether the employer, no longer desires to have the work previously performed by the terminated employee done by anyone;

(d)    A redundancy may also arise upon the redistribution of job functions, where the duties performed by an employee are redistributed among other employees. In this case the employer still requires the duties to be performed, but the reorganisation may give rise to a redundancy. In this event, although the duties remain to be performed, “for all practical purposes the original role no longer exists” because the duties are divided and assigned amongst others. In such a case the question is whether any function or duty remains to be performed by the employee. A redundancy will occur if, after the reorganisation, the employee in question is left with no duties to discharge; and

(e)    Redundancy will not arise where the termination of employment is carried out solely because of any personal act or default of the employee terminated or for any consideration peculiar to that employee. [371]

42      In Purdon v The Ascent Group Australia Ltd T/A The Ascent Group [2012] FWA 2495 Watson VP said:

When a job disappears, work disappears or the workplace disappears and this leads to a termination of employment, the circumstances are commonly described as a redundancy. [14]

43      In Jones v Department of Energy and Minerals (1995) 60 IR 304 Ryan J held:

What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organisation, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant… [308]

44      It is apparent that in the claimant’s case, her position of operations manager with the STCWA ceased to exist. As a consequence of the termination of the management agreement the respondent was unable, after 31 December 2014, to provide the claimant or anyone else with employment in that position. It follows that the position became redundant.

45      The respondent contends that the claimant is, as a result of her conduct, estopped from claiming the redundancy payment which she seeks. The conduct complained of is the withdrawal of her application for the position of assistant manager of His Majesty’s Theatre which had been offered by the PTT. In that regard the respondent seems to be relying on equitable principles. It is highly questionable whether it is open for the respondent to rely on common law and/or equitable principles in circumstances in which the FW Act codifies the law with respect to redundancy in national system employment.

46      In the event that the respondent may also be relying on the disentitling provision in s 122(3) of the FW Act I make the following observations.

47      In order for s 122(3) of the FW Act to apply there needs to be satisfaction of the following:

1. That the claimant has rejected an offer from another employer:

1. on terms and conditions substantially similar to, and considered on an overall basis, no less favourable than, the claimant’s terms and conditions of employment with the respondent immediately before termination; and
2. that recognises her service with the respondent for the purposes redundancy pay; and
   2. Had the claimant accepted the offer there would have been a ‘transfer of employment’.

48      Section 22(8) of the FW Act indicates that a ‘transfer of employment’ may occur between associated entities and non-associated entities. For my purposes it is obvious that the respondent and the PTT are not associated entities. Section 22(8)(b) of the FW Act provides that a ‘transfer of employment’ between non-associated entities occurs in the circumstances set out in s 22(7)(b) of the FW Act. In the context of this case it must be established that: 

1. The claimant was a transferring employee in relation to the transfer of a business from the respondent to the PTT; and
2. The respondent and the PTT were not associated entities.

49      It is obvious that there could never have been a ‘transfer of employment’ (as defined in s 22(7)(b) of the FW Act) because the respondent did not transfer its business to the PTT.  The element of transfer of employment which underpins the applicability of s 122(3) of the FW Act has never existed. For that reason alone s 122(3) of the FW Act does not application.  Even if it could be said to apply there is no evidence to support the contention that the claimant was offered a position which would, for the purpose of redundancy, recognise her prior service with the respondent.

50      The respondent’s decision not to pay the claimant a redundancy payment does not have statutory support.

51      Assuming for present purposes that it is open for the respondent to argue estoppel, I move to consider whether the facts support the respondent’s contention in that regard.  

52      The respondent contends that the PTT offered the claimant employment on terms more favourable than the employment with the respondent. It says also that the claimant unilaterally disengaged from the recruitment process and declined the offered employment.

53      Firstly, I am not satisfied that the PTT offered the claimant employment. Secondly, for the reasons previously given, I cannot be satisfied that the position of assistant manager of His Majesty’s Theatre carried employment terms that would have been the same or more favourable than those provided by the respondent. 

54      The PTT’s letter to the claimant of 7 November 2014 (exhibit 13) was not an offer of employment. There was nothing in that letter which was capable of acceptance by the claimant. The letter did not invite the claimant to enter into a contract of employment. Indeed it did no more than to advise the claimant that she was the preferred candidate for the position. There was no guarantee of employment. It remained open to the PTT not to offer her employment. The position could have been taken up by someone else despite her being the preferred candidate.

55      It follows that there was no offer of employment, let alone on equal or more favourable terms. In the circumstance it was open for the claimant to have withdrawn her candidacy and to have sought employment elsewhere, as she did. Nothing that the claimant did was improper or inappropriate. Her conduct did not give rise to estoppel.  She is not estopped from receiving the redundancy payment that she seeks.

56      Before concluding, I think it is important to comment about Mr Phillips’ letter to the claimant dated 24 December 2014 (exhibit 20). In that letter he said:

There is an agreement between PTT, WASO and the Department of Culture and the Arts (DCA) for the management of PCH. The funding for PCH is conducted in the same way (through State Government Appropriation) as has been the case with the present arrangements between PTT and AEGOP. You are therefore transferring employment from AEGOP to an associated entity with PTT and are being employed on terms and conditions similar to your current employment.

57      Mr Phillips believed that the claimant had gained employment with the West Australian Symphony Orchestra (WASO). He was wrong about that. Even if things were as he believed,   he was wrong in his assertion that the claimant’s employment with an entity associated with the PTT amounted to a transfer of employment to that entity. The relationship between the PTT and its associated entities and/or others was entirely irrelevant. Furthermore the respondent’s contractual arrangements with the PTT including cl 12.3 of the management agreement, to which the claimant was not privy, cannot have the effect of extinguishing an entitlement prescribed by s 119 (1) of the FW Act.

58      Finally the fact that the claimant’s current employer, WAVE, may have some contractual and/or other association with the PTT has no bearing on the respondent’s obligation to pay the claimant her redundancy entitlement.

Conclusion

59      The claimant is entitled to a redundancy payment of $16,603.80 plus interest.

G. CICCHINI 

INDUSTRIAL MAGISTRATE