Failure to provide fully maintained vehicle leads to redundancy entitlement

Failure to provide fully maintained vehicle leads to redundancy entitlement

Failure to provide fully maintained vehicle leads to redundancy entitlement

The Fair Work Commission has dismissed an application by an employer to vary an employee’s redundancy entitlement, ruling that although the employee secured a new job substantially similar to their previous role, it did not constitute other acceptable employment as it did not provide access to a fully maintained vehicle.

The employer, Watters Electrical Pty Ltd T/A Watters Electrical (Watters), provides a range of electrical services across regional Victoria. Watters applied to the Commission, under s.120 of the Fair Work Act 2009 (the Act),  to reduce the redundancy entitlement of a former employee, ‘Mr M’, from thirteen weeks to six weeks.

Mr M commenced employment with Watters on 1 February 2016 as an A-Grade Electrician, with his employment ceasing on 20 December 2023. At that time, he was performing the role of a working foreperson on a base rate of $45.00ph and, critically, had the benefit of a fully maintained company motor vehicle as part of his employment conditions.

In October 2023, Watters decided to close its High Voltage (HV) department due to ongoing difficulties recruiting suitable staff and diminishing work opportunities. Company management met with GPE Electrical & Communications (GPE) to discuss the possibility of GPE taking over Watters’ existing HV jobs, reviewing their quoted works, purchasing some plant and equipment, and potentially taking over several of Watters employees.

Following the discussions, four Watters’ staff, including Mr M, were offered the opportunity to apply for roles with GPE. He ceased employment with Watters on 20 December 2023 and commenced employment with GPE on 8 January 2024.

Mr M was engaged by GPE at the same hourly base rate of $45.00 but was not provided with a fully maintained motor vehicle as part of his employment conditions.

Under the terms of the Act, Mr M was entitled to thirteen weeks’ pay based on his service with the company being between 7 and 8 years. However, Watters sought to reduce the quantum to six weeks.

As noted by Deputy President Ian Masson, the central argument to be determined is whether the alternate employment offered by GPE to Mr M constituted ‘other acceptable employment’ for the purpose of s.120 of the Act and whether that employment was obtained through the ‘conscious and intended’ acts of Watters.

With regard to the latter question, the Deputy President acknowledged that Watters secured the employment of Mr M with GPE through its various intended acts, as described above.

With regard to whether the role with GPE represented acceptable alternate employment, the Deputy President noted that the role was at the same rate, substantially the same (without requiring him to perform any supervisory duties), and based in a similar geographic location.

However, as the Deputy President noted, “There is one difference in employment conditions that is of substance and that is the motor vehicle Mr (M) had the private use of while working for Watters. He does not have the benefit of the private use of a motor vehicle in his new role with GPE … I am satisfied that the foregone benefit of the company provided motor vehicle with Watters represents a substantial lost financial benefit that must be weighed in assessing whether the role with GPE represents suitable alternate employment”.

In the Deputy President’s view, the loss of the motor vehicle benefit was sufficient enough to make him conclude that the new role with GPE does not constitute ‘other acceptable employment’ within the meaning of the Act.

Consequently, the application to vary the redundancy payment was dismissed.

Watters Electrical Pty Ltd T/A Watters Electrical v BHM (C2023/8105) 14 February 2024

For queries about redundancy, entitlements, or other employment questions, please contact Dean Cameron at Workforce Advisory Lawyers – We Know Employment Law on 0417 622 178, 1300 WAL LAW or via email to dean.cameron@workforceadvisory.com.au

Disclaimer: This information is provided as general advice on workplace relations and employment law. It does not constitute legal advice and it is always advisable to seek further information regarding specific workplace issues. Liability limited by a scheme approved under professional standards legislation.

Ref: 421.0324

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