Application by Coastal Formwork Pty Ltd

[2016] FWC 2705

[2016] FWC 2705

DECISION

Fair Work Act 2009
s.120—Redundancy pay
Coastal Formwork Pty Ltd
(C2016/257)
COMMISSIONER WILLIAMS	PERTH, 4 MAY 2016
Variation of redundancy pay.

[1]        This decision concerns an application made by Coastal Formwork Pty Ltd (Coastal

Formwork or the applicant) under section 120 of the Fair Work Act 2009 (the Act) concerning

the variation of redundancy pay.

Background

[2]        Coastal Formwork is involved in concreting contracting in the domestic and building

construction sector. The business was established in 2000 by Mr Paul Newport (Mr Newport).

In August 2014 Mr Newport was injured and unable to continue in the hands-on role he had

been. Subsequently the company suffered a decline in its financial fortunes in the financial

year 2014/2015. At the end of that financial year Mr Newport’s accountant suggested he wind

up the company in December 2015 and put the employees off. Having dismissed the

employees he has now made this application to vary the redundancy pay he understands is

owing to his past employees.

Evidence and Factual findings

[3]        The five potentially affected employees were notified by the Commission of the

hearing of this matter and provided copies of all submissions, statutory declarations and

supporting materials that Mr Newport has filed. None of the employees attended the hearing.

Mr Newport gave evidence at the hearing as to the history of the business and the state of the

businesses finances. He also gave evidence as to what efforts he had made to assist some of

the dismissed employees either gain other employment or get their own businesses off the

ground.

[4]        Mr Newport gave evidence that the core business of Coastal Formwork was concreting

and formwork on residential and commercial building sites.

[5]        Mr Newport explained what each of the five potentially affected employees did as

follows.

[6] Mr Hansford was employed as a concreter, Mr Staples was employed as a carpenter,

Mr Bill was employed as a concreter and Mr Sattell was employed as a concreter. Each of
[2016] FWC 2705

these employees undertook this work at various residential and commercial building sites as

directed.

[7]        Mr Nordhal was employed the majority of his time as a truck driver driving a 9 tonne

hiab vehicle transporting materials and equipment backwards and forwards between the yard

Coastal Formwork maintained in Halifax and the various residential and commercial building

sites. A minority of his time was spent doing some labouring on-site.

[8]        At the time the employees were dismissed Coastal Formwork employed fewer than 15

employees.

Applicable awards

[9]        Prior to the hearing of this matter the Commission requested Mr Newport confirm

which awards he believe applied to the employment of the respective employees.

[10]      Mr Newport provided a submission which argued that the Premixed Concrete Award

2010 [MA000057] applied to the employment of those employees working as concreters, that

the Joinery and Building Trades Award 2010 [MA000029] applied to the employee working

as a carpenter and that the Road Transport and Distribution Award 2010 [MA000038]

applied to the employee working as a truck driver.

[11]      Having reviewed the Premixed Concrete Award 2010 and the Joinery and Building

Trades Award 2010 I note that neither award applies to work done on-site.

[12]      With respect to the Joinery and Building Trades Award 2010 the coverage of the

award is expressed as follows:

“4.	Coverage
4.1	This award covers employers throughout Australia of employees in the joinery
and building trades industries and occupations who are covered by the
classifications in this award and those employees. However this Award does
not cover:
...
(d) employers or employees covered by the Building and Construction

General On-site Award 2010; or

...

4.8	Joinery and building trades industries and occupations means:
(a) the following industries:

(i)          joinery work.

(ii)         shopfitting.

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(iii)        prefabricated building.

(iv)        stonemasonry.

(v)         glass and glazing contracting.

(vi)        glass and glazing work.

(b)

the following occupations:

(i)	carver.
(ii)	letter cutter.
(iii)	carpenter.
(iv)	joiner.
(v)	signwriter.
(vi)	painter.
(vii)	stonemason.

(viii) plasterer.”

[13]      Clause 3−Definitions says ‘joinery work’ means work performed by the classifications

contained in this award in a joinery shop, provided such establishment is not located on an

‘on-site’ construction project, and includes the preparation, decoration and assembling of

joinery or building components principally in timber or similar material. (Underlining added)

[14]      It is clear that joinery work excludes on-site construction work.

[15]      Formwork being carried out for concreting on-site is not joinery work.

[16]      The Joinery and Building Trades Award 2010 does not apply to a carpenter doing such

formwork on-site.

[17]      With respect to the Premixed Concrete Award 2010 the coverage of the award is set

out in clause 4 below.

“4.	Coverage
4.1	This industry award covers employers throughout Australia in the premixed
concrete industry and their employees in the classifications listed in Schedule
B—Classification Descriptors, to the exclusion of any other modern award.
...

[2016] FWC 2705

4.7 The award does not cover employers and their employees in the on-site

building, engineering and civil construction industry, covered by the Building

and Construction General On-site Award 2010.”

[18]      Clearly then the effect of clause 4.7 is that it will not apply to Coastal Formwork and

the concreters employed by this business if the employees in these classifications would

otherwise be covered by the Building and Construction General On-site Award 2010.

[19]      To put this issue beyond doubt for the carpenter and the concreter classifications it is

necessary to consider whether the Building and Construction General On-site Award 2010

[MA000020] applied to the concreters and the carpenter employed by Coastal Formwork.

[20]      The relevant clauses of the Building and Construction General On-site Award 2010

are set out below.

“4.	Coverage
4.1	This industry award covers employers throughout Australia in the on-site
building, engineering and civil construction industry and their employees in
the classifications within Schedule B—Classification Definitions to the
exclusion of any other modern award.
4.2	Without limiting the generality of the exclusion, this award does not cover
employers covered by:
(a) the Manufacturing and Associated Industries and Occupations Award

2010;

(b)	the Joinery and Building Trades Award 2010;
(c)	the Electrical, Electronic and Communications Contracting Award

2010;

(d)	the Plumbing and Fire Sprinklers Award 2010;
(e)	the Black Coal Mining Industry Award 2010;
(f)	the Mining Industry Award 2010; or
(g)	the Quarrying Award 2010; or
(h)	the Pre-Mixed Concrete Award 2010.

...

4.9	For the purpose of clause 4.1, on-site building, engineering and civil
construction industry means the industry of general building and construction,
civil construction and metal and engineering construction, in all cases
undertaken on-site.”

[2016] FWC 2705

[21]      This award covers the industry of on-site building, engineering and civil construction.

This is defined as the industry of general building and construction undertaken on-site.

Further Schedule B—Classification Definitions includes classifications for concreters and

carpenters.

[22]      I am satisfied then that the Building and Construction General On-site Award 2010

applied to the employment of Mr Hansford, Mr Staples, Mr Bill and Mr Sattell.

[23]      With respect to the Road Transport and Distribution Award 2010 clause 4 deals with

the coverage of this award is set out below.

“4.	Coverage
4.1	This industry award covers employers throughout Australia in the road
transport and distribution industry and their employees in the classifications
listed in clause 15—Classifications and minimum wage rates to the exclusion
of any other modern award.” (Underlining added)

[24]      I am satisfied then that Mr Nordhal was working as a truck driver in a classification

that would be covered by clause 15−Classification and Minimum Rates of the award however

there is real doubts as to whether it could be said that Coastal Formwork was in the road

transport and distribution industry.

[25]      In my view then this award did not apply to the employment of Mr Nordhal.

[26]      However separately having reviewed the classifications and industry again of the

Building and Construction General On-site Award 2010 my conclusion is that whilst Coastal

Formwork are covered by this award Mr Nordhal was not employed in a classification

covered by this award.

[27]      My conclusion then is that Mr Nordhal was covered by the Miscellaneous Award 2010

[MA000104] and this award applied to his employment with Coastal Formwork.

[28]      With respect to redundancy pay this award provides as follows:

“12. Redundancy

12.1 Redundancy pay is provided for in the NES.”

Redundancy Pay

[29]      Before considering further the application by Coastal Formwork to vary the amounts

of redundancy pay owing it is necessary to clarify the source of any redundancy pay and

entitlements.

[30] The National Employment Standards in the Act include standards for redundancy pay.

These are set out below.
[2016] FWC 2705

“Subdivision B—Redundancy pay

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.

Note: Sections 121, 122 and 123 describe situations in which the employee does not

have this entitlement.

Amount of redundancy pay

(2) The amount of the redundancy pay equals the total amount payable to the

employee for the redundancy pay period worked out using the following table at the

employee’s base rate of pay for his or her ordinary hours of work:

Redundancy pay period

Employee’s period of continuous service with the	Redundancy pay
employer on termination	period

1	At least 1 year but less than 2 years	4 weeks
2	At least 2 years but less than 3 years	6 weeks
3	At least 3 years but less than 4 years	7 weeks
4	At least 4 years but less than 5 years	8 weeks
5	At least 5 years but less than 6 years	10 weeks
6	At least 6 years but less than 7 years	11 weeks
7	At least 7 years but less than 8 years	13 weeks
8	At least 8 years but less than 9 years	14 weeks
9	At least 9 years but less than 10 years	16 weeks
10	At least 10 years	12 weeks

120       Variation of redundancy pay for other employment or incapacity to pay

(1) This section applies if:

[2016] FWC 2705

(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.

121       Exclusions from obligation to pay redundancy pay

(1) Section 119 does not apply to the termination of an employee’s employment if,

immediately before the time of the termination, or at the time when the person was

given notice of the termination as described in subsection 117(1) (whichever happened

first):

(a) the employee’s period of continuous service with the employer is less than

12 months; or

(b) the employer is a small business employer.

(2) A modern award may include a term specifying other situations in which section

119 does not apply to the termination of an employee’s employment.

(3) If a modern award that is in operation includes such a term (the award term), an

enterprise agreement may:

(a) incorporate the award term by reference (and as in force from time to time)

into the enterprise agreement; and

(b) provide that the incorporated term covers some or all of the employees who

are also covered by the award term.

Subdivision C—Limits on scope of this Division

123       Limits on scope of this Division

...

Other employees not covered by redundancy pay provisions

(4) Subdivision B does not apply to:

[2016] FWC 2705

(a) an employee who is an apprentice; or

(b) an employee to whom an industry-specific redundancy scheme in a modern

award applies; or

(c) an employee to whom a redundancy scheme in an enterprise agreement

applies if:

(i) the scheme is an industry-specific redundancy scheme that is

incorporated by reference (and as in force from time to time) into the

enterprise agreement from a modern award that is in operation; and

(ii) the employee is covered by the industry-specific redundancy scheme

in the modern award; or

(d) an employee prescribed by the regulations as an employee to whom that

Subdivision does not apply.”

[31] As can be seen from the above sections of the Act an employer can, under section 120,

apply to vary the redundancy pay where that is required to be paid by section 119; either

because they have obtained other acceptable employment for the employee or because the

employer is unable to pay the redundancy pay. This is the application that Coastal Formwork

has made with respect to each of the five employees.

[32]      However section 123 of the Act says that Subdivision B, which includes sections 119

to 122, does not apply to an employee to whom an industry specific redundancy scheme in a

modern award applies.

[33]      Turning then firstly to consider the Building and Construction General On-site Award

2010 which applies to the carpenter and the concreters. This award contains the following

clause:

“17.	Industry specific redundancy scheme
17.1	The following redundancy clause for the on-site building, engineering and civil
construction industry (as defined) is an industry specific redundancy scheme
as defined in s.12 of the Act. In accordance with s.123(4)(b) of the Act the
provisions of Subdivision B—Redundancy pay of Division 11 of the NES do not
apply to employers and employees covered by this award.
17.2	Definition
For the purposes of this clause, redundancy means a situation where an
employee ceases to be employed by an employer to whom this award applies,
other than for reasons of misconduct or refusal of duty. Redundant has a
corresponding meaning.

[2016] FWC 2705

17.3	Redundancy pay
(a) A redundant employee will receive redundancy/severance payments,
calculated as follows, in respect of all continuous service with the employer:
Period of continuous service with Redundancy/severance pay
an employer
1 year or more but less than 2 years 2.4 weeks’ pay plus for all service in

excess of 1 year, 1.75 hours pay per

completed week of service up to a

maximum of 4.8 weeks’ pay

2 years or more but less than 3 years	4.8 weeks’ pay plus, for all service in
excess of 2 years, 1.6 hours pay per
completed week of service up to a
maximum of 7 weeks’ pay
3 years or more than but less than	7 weeks’ pay plus, for all service in
4 years	excess of 3 years, 0.73 hours pay per
completed week of service up to a
maximum of 8 weeks’ pay
4 years or more	8 weeks’ pay

(b) Provided that an employee employed for less than 12 months will be

entitled to a redundancy/severance payment of 1.75 hours per week of service

if, and only if, redundancy is occasioned otherwise than by the employee.

(c) Week’s pay means the ordinary time hourly rate at the time of termination

multiplied by 38. Hour’s pay means the ordinary time hourly rate at the time of

termination.

(d) If an employee dies with a period of eligible service which would have

entitled that employee to redundancy pay, such redundancy pay entitlement

will be paid to the estate of the employee.

(e) Any period of service as a casual will not entitle an employee to accrue

service in accordance with this clause for that period.

(f) Service as an apprentice will entitle an employee to accumulate credits

towards the payment of a redundancy benefit in accordance with this clause if

the employee completes an apprenticeship and remains in employment with

that employer for a further 12 months.” (Underlining added)

[2016] FWC 2705

[34]      Because the redundancy provisions in this award is described as an industry specific

redundancy scheme section 123 of the Act means employees covered by this award do not

receive the redundancy payments provided by section 119 of the Act. Instead employees to

whom this award applies, in this case Mr Hansford, Mr Staples, Mr Bill and Mr Sattell, are

entitled to the redundancy pay provided by this clause of the award.

[35]      Importantly however the award clause does not specify that there is any ability for an

employer to make an application to vary these redundancy pay amounts.

[36] As explained above an application under section 120 of the Act can only be made by

an employer where the employee is entitled to redundancy payments under section 119 of the

Act. That is not the case for these four employees. They are entitled to redundancy pay under

the applicable award not under section 119. Consequently there is no legal basis for the

application by Coastal Formwork to vary the application for these four employees

[37]      With respect to Mr Nordhal as explained above his redundancy pay entitlement under

the applicable award is provided for in the National Employment Standards. As explained

above the National Employment Standards are sections 119 to 122 of the Act.

[38]      As can be seen from section 121(1) (b) of the Act set out in [30] above section 119,

which sets out an entitlement to redundancy pay, does not apply where the employer is a

small business employer.

[39]      ‘Small business employer’ is defined in section 23 of the Act to be an employer who

employs fewer than 15 employees.

[40]      I am satisfied that Coastal Formwork was a small business employer and consequently

no redundancy pay was required to be paid to Mr Nordhal. Consequently there is no need for

Coastal Formwork to seek a variation as no redundancy pay under section 119 of the Act is

payable to this employee.

Conclusion

[41]      The application to vary the redundancy payments required be paid to Mr Hansford, Mr

Staples, Mr Bill, and Mr Sattell has no basis under the legislation. The application concerning

these four employees is dismissed and there is no variation to their redundancy pay

entitlement which is provided for in the Building and Construction General On-site Award

2010.

[42]      With respect to Mr Nordhal there was no requirement to pay redundancy pay and so

no application was necessary.

[43]      Consequently the Commission will now dismiss this application. An order to that

effect will be issued.

COMMISSIONER

[2016] FWC 2705

Appearances:

P Newport on behalf of the applicant.

Hearing details:

2016.

Perth:

April 22.

Printed by authority of the Commonwealth Government Printer

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