DECISION

Fair Work Act 2009
s.120—Redundancy pay

Application by Zuza Pty Ltd
(C2020/8261; C2020/8262; C2020/8263; C2020/8264; C2020/8265; C2020/8266; C2020/8267; C2020/8268; C2020/8269; C2020/8270; C2020/8271; C2020/8272; C2020/8273; C2020/8274; C2020/8275; C2020/8276)

DEPUTY PRESIDENT LAKE

BRISBANE, 7 DECEMBER 2020

Variation of redundancy pay – incapacity to pay – where employer had significant debt and no income stream – multiple applications - where business had permanently ceased trading – redundancy pay varied to nil – application successful.

Background

[1] Zuza Pty Ltd (Zuza, 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 16 employees (the Respondents). The Applicant contends that they have an incapacity to pay and that all of the employee’s entitlements should reduced accordingly.

[2] The Respondents were all employees who were involved in the operation of the Grill’d West End restaurant. This restaurant was the entirety of the Applicant’s business. On 30 September 2020, the Grill’d West End store was permanently closed.

[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

Relevant Legislation

[4] 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 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 employer on termination	Redundancy pay 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

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: [2020] FWC 6575
Decision Date: 7 DECEMBER 2020

CaseChat Overview and Summary

Zuza Pty Ltd applied to the Fair Work Commission to vary redundancy payments owed to employees following the cessation of its business. The company, having no income stream and significant debt, was unable to meet its obligations. The employees had previously been paid partial redundancy, but the company now sought to reduce this further due to its financial situation. The Commission was tasked with determining whether the company's incapacity to pay justified a variation of the redundancy payments.

The legal issues before the Commission involved assessing the employer's financial position and the reasonableness of the application to vary the redundancy pay in light of the company's insolvency and cessation of operations. The Commission needed to consider whether the company had made a genuine effort to meet its obligations and whether the variation request was justified by the employer's financial circumstances.

The Commission found that the company had acted in good faith and made reasonable efforts to meet its obligations, but its significant debt and lack of income left it unable to pay the redundancy entitlements. Given the company's permanent cessation of trading and its financial position, the Commission varied the redundancy payments to nil. The decision was influenced by the company's incapacity to pay and the employees' lack of alternative employment. The application to vary the redundancy payments was successful.

The Commission ordered that the remaining redundancy payments owed by Zuza Pty Ltd to its employees be reduced to nil, reflecting the company's inability to pay due to its financial circumstances and the cessation of its business operations.

Orders