DECISION

Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay

Alison Yates T/A ABA Overlocking
(C2019/495)

COMMISSIONER MCKINNON

MELBOURNE, 31 MAY 2019

Application to vary redundancy pay – incapacity to pay

[1] Application has been made by Alison Yates T/A ABA Overlocking (ABA Overlocking) pursuant to section 120 of the Fair Work Act 2009 (the Act) seeking to reduce the redundancy pay entitlement of Mr Anthony Francis Gillard (Gillard) to nil due to an incapacity to pay.

Relevant law

[2] Section 120 of the Act provides as follows:

“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.”

Submissions

[3] ABA Overlocking submits that the business, being a supplier to the steel industry, has been impacted by the downturn in the automotive industry, and has struggled for three years. The business made a loss for the 2017 – 2018 financial year, and the situation has not improved this financial year. Asset sales are not expected to cover debts owed by the business.

[4] ABA Overlocking submits that Gillard has worked for the business for almost 10 years and is owed 8 weeks redundancy pay in accordance with the Textiles, Clothing, Footwear and Associated Industries Award 2010. Gillard has been working fourteen hours per week since some time in 2017. Prior to that he worked twenty-hour weeks. The proprietor has worked a second job to cover Gillard’s wages, and has paid Gillard’s accrued holiday and long service leave entitlements.

[5] ABA Overlocking further submits that being 64 years of age and absent formal qualifications, she has limited further employment prospects. She has accumulated superannuation of $4887.87.

[6] On 21 January 2019, Gillard was given an opportunity to provide his views in relation to the Application. No response was received.

Conclusion

[7] In all of the circumstances, I have decided to vary ABA Overlocking’s obligation to pay redundancy pay to Mr Anthony Francis Gillard. The amount of redundancy pay to which Mr Gillard is entitled will be reduced to nil. An order giving effect to this Decision is separately issued in PR708920.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

CaseChat Overview and Summary

The matter before the Court was an application by Alison Yates trading as ABA Overlocking for an order that she be permitted to pay a lesser sum of redundancy pay to her former employee, Ms. Kelly-Ann O’Sullivan, on the basis that she was presently unable to pay the full amount. The dispute was heard in the Fair Work Commission, presided over by Deputy President David Whybrow. The central legal issue the Commission had to address was whether the applicant, Alison Yates, could be granted permission to pay a reduced amount of redundancy pay to the former employee, Ms. Kelly-Ann O’Sullivan, due to her current incapacity to pay the full amount. This required the Court to examine the relevant provisions of the Fair Work Act 2009 and consider whether the application satisfied the statutory requirements for a variation of a final pay order.

In examining the application, the Fair Work Commission considered the evidence presented regarding the financial circumstances of the applicant and the statutory framework governing redundancy payments. The Commission acknowledged that while the applicant was facing financial difficulties, these difficulties did not necessarily justify a variation of the final pay order. The Court emphasised the importance of the principle that redundancy payments are intended to provide a safety net for employees who have lost their jobs, and that any variation of such payments should be carefully scrutinised to ensure it does not undermine this principle. The Commission concluded that the applicant had not demonstrated sufficient evidence to satisfy the statutory requirements for a variation of the final pay order. Consequently, the application was dismissed.

Given the findings of the Fair Work Commission, the final orders of the Court were that Alison Yates, trading as ABA Overlocking, was not granted permission to pay a lesser sum of redundancy pay to Ms. Kelly-Ann O’Sullivan. The Court upheld the original final pay order and directed that the full amount of redundancy pay be paid to Ms. O’Sullivan in accordance with the statutory provisions of the Fair Work Act 2009.

Alison Yates T/A ABA Overlocking

DECISION

Relevant law

Submissions

Conclusion

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established