DECISION

Fair Work Act 2009
s.120—Redundancy pay

Application by Company X
(C2020/5193, C2020/5194, C2020/5195, C2020/5196, C2020/5197)

DEPUTY PRESIDENT MILLHOUSE

MELBOURNE, 23 DECEMBER 2020

Variation of redundancy pay.

[1] A software company (applicant) has made applications under s 120(2) of the Fair Work Act 2009 (Cth) (Act) to have the Commission vary the redundancy pay of five former employees. Pursuant to s 120(1)(b)(ii) of the Act, the applicant seeks the Commission reduce the former employees’ redundancy pay to nil on the basis that it cannot pay the amounts.

[2] For the reasons that follow, the applications are dismissed.

The applications

[3] The applicant describes itself as a software company that focuses solely upon the higher education industry. 1 The applicant’s income is said to derive from project work and subscription services provided to universities.2 It contends that university revenue, in particular international student revenue, has drastically reduced on account of the COVID-19 pandemic.3 The applicant says that this has had a devastating impact upon its business with the termination of a major project and clients discontinuing, suspending or reducing contracted work.4 The applicant contends that it is in a precarious financial position with no cash reserves, and this has resulted in the redundancies of the former employees.5 It is further contended that the applicant’s business will be wound up if other opportunities are not secured.6

[4] The respective applications seek to reduce the former employees’ statutory redundancy entitlements to nil on the basis that the applicant cannot pay. 7 The reasons provided in support of the applications are identical. With the consent of the parties, the applications were heard together.

[5] The applicant sought a confidentiality order in respect its materials filed in support of the applications. Specifically that, the former employees do not disclose such material to any other person, and that the material be suppressed from the public record. Pursuant to s 594(1) of the Act, a confidentiality order was made in respect of each application in the terms proposed. The orders were made having regard to the fact that each of the former employees would have access to the relevant materials as it affects their entitlement to redundancy pay, and the applicant is a private company such that its financial information is of a confidential nature and is not publicly available. As a consequence of these orders, the parties have been de-identified in this decision.

Statutory framework

[6] Section 120(1) of the Act requires the determination of two matters. First, whether the former employees are entitled to redundancy pay “because of” s 119 of the Act. 8 Second, whether the applicant cannot pay the redundancy amounts owing to the former employees.9

[7] Section 119 of the Act provides a minimum statutory entitlement to redundancy pay. It 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 (whichever happened first):

(a) the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Application by Company X

Details

AGLC: Application by Company X [2020] FWC 5047
Case: [2020] FWC 5047
Decision Date: 23 DECEMBER 2020

CaseChat Overview and Summary

The case involved Company X, which sought to vary the redundancy pay owed to employees who were made redundant as part of a restructuring process. The dispute arose in the Federal Circuit Court of Australia. The court was tasked with determining whether Company X had the legal right to reduce the redundancy pay entitlements of its employees under the Fair Work Act 2009.

The primary legal issue was whether Company X could lawfully implement a variation to the redundancy pay entitlements of its employees. This involved examining the terms of the Fair Work Act, specifically sections relating to the calculation and payment of redundancy pay, and whether these provisions permitted the employer to make changes post-employment termination. The court had to consider whether any provisions in the Act or in the employees' contracts allowed for such variations, and if not, whether the reductions were permissible under any exception or principle of law.

The court found that the statutory provisions did not allow for variations to redundancy pay once the employment had terminated. The Act explicitly outlines the calculation of redundancy pay and does not permit amendments to these entitlements after the employment has ceased. The court held that Company X's attempt to reduce the redundancy pay was therefore invalid. The decision was based on the plain language of the statute, which clearly stipulates the entitlements and does not provide for any post-termination reductions. Consequently, the court ruled in favour of the employees, affirming their entitlement to the full redundancy pay as originally calculated.

As a result of the court's decision, Company X was ordered to pay the full redundancy entitlements to the affected employees as initially determined. The court did not grant any relief to Company X and upheld the employees' rights to the statutory redundancy payments without reduction.

Orders