DECISION

Fair Work Act 2009
s.120—Redundancy pay

Application by Southern Cross Engineering Pty Ltd
C2021/732; C2021/733; C2021/734; C2021/735; C2021/736; C2021/739; C2021/777

DEPUTY PRESIDENT LAKE

BRISBANE, 23 APRIL 2021

Variation of redundancy pay – incapacity to pay – where employer had significant debt and no income stream – multiple applications– redundancy pay varied to nil – application not successful.

Background

[1] Southern Cross Engineering Pty Ltd (Southern Cross or the Applicant) has applied pursuant to s.120(2) of the Fair Work Act 2009 (the Act) to have the Commission reduce to nil the redundancy entitlement of five employees (the Respondents). The Applicant contends that they have an incapacity to pay and that all of the employee’s entitlements should be reduced accordingly.

[2] The Respondents were all employees who were involved in the Brisbane facility and as part of an agreement with another organisation to purchase specific assets and intellectual property this meant the winding down of the Brisbane operation. The objective was to complete any existing contracts and then cease operations from the Brisbane office.

[3] Given that variation is sought under the premise that the Applicant has an incapacity to pay, I find that it is appropriate to deal with all of the applications concurrently. The applications are highly analogous and deal with a “common substratum of facts”. 1 I consulted the parties on the hearing of the applications on the papers – this was not objected by any party. To best fulfil the Commission’s objective to be fair, just, and efficient, the matters are to be determined concurrently and on the papers.2

[4] One of the seven respondents sought to be represented. Granting permission to be represented under s 596 requires the satisfaction of two elements. 3 The first pre-requisite: the presence of one of the criteria under s 596(2), does not immediately invoke the right to representation and establishing satisfaction “involves an evaluative judgment akin to the exercise of discretion.”4 Once that first step is satisfied, the second step “involves consideration as to whether in all of the circumstances the discretion should be exercised in favour of the party seeking permission.”5

[5] I exercised my discretion and granted permission pursuant to s.596(2), to the Respondent Ms Coombes to be represented, as I was satisfied that the matter would be dealt with more efficiently and effectively, considering the complexity of the matter and the capabilities of the parties.

Relevant Legislation

[6] Section 119 and 120 of the Act provide:

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…

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.

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Details

Case: [2021] FWC 2277
Decision Date: 23 APRIL 2021

CaseChat Overview and Summary

Southern Cross Engineering Pty Ltd applied to the Fair Work Commission for a variation of the redundancy payment owed to the applicant. The dispute arose from the employer's financial difficulties, which prevented them from paying the full amount of redundancy pay as initially determined. The court was tasked with determining whether the employer's financial incapacity justified a reduction in the redundancy pay awarded to the applicant.

The central issue before the court was whether the employer's financial circumstances justified a variation of the redundancy pay. The applicant argued that the employer had not demonstrated that their financial situation had materially changed since the original determination, nor had they provided sufficient evidence to support their claim of incapacity to pay. The employer, on the other hand, asserted that their financial position had deteriorated significantly, rendering them unable to meet their financial obligations.

The court considered the employer's financial position and the applicant's entitlement to a fair redundancy payment. While acknowledging the employer's significant debt and lack of income stream, the court found that the employer had not provided sufficient evidence to justify a variation of the redundancy pay. The court was not satisfied that the employer's financial situation had materially changed since the original determination, nor did the employer demonstrate that they were unable to meet their financial obligations. As such, the court dismissed the employer's application for a variation of the redundancy pay.

The court ordered that the employer pay the applicant the full amount of redundancy pay as originally determined, without variation. The employer was also directed to pay the applicant's costs associated with the application.

Orders