DECISION

Fair Work Act 2009
s.120—Redundancy pay

Brauntell MBK Pty Ltd
v
Ryan Murphy
(C2020/4063)

DEPUTY PRESIDENT CROSS

SYDNEY, 10 JULY 2020

Variation of redundancy pay.

[1] This is an application under s.120 of the Fair Work Act 2009 (the “Act”) by Brauntell MBK Pty Ltd (“Brauntell” or the “Applicant”) to reduce the redundancy pay otherwise due under National Employment Standards (the “NES”) on the grounds that Brauntell has offered Mr Ryan Murphy (the “Employee”) acceptable alternative employment.

[2] The application was lodged on 28 May 2020, and was heard on 10 July 2020. Brauntell was represented by Ms Alexandra Meissner, from their Human Resources department, and the Employee represented himself. At the conclusion of the proceedings on 10 July 2020, I indicated that I would dismiss the application. These are the reasons for that dismissal.

Statutory provisions

[3] Section 120 of the Act is to be found in Chapter 2, Part 2-2, Division 11. Division 11 relates to notice of termination and redundancy pay, and is an NES. The NES, along with the relevant modern award, establishes the main terms and conditions of employment for employees. 1 The NES must not be contravened by an employer.2

[4] A modern award must not exclude the NES or any provisions of the NES although it may include terms with respect to the NES that it is expressly permitted to include under the NES or the relevant regulations. 3 A modern award may include terms ancillary or incidental to the NES or supplement the NES but only to the extent that the effect of those terms is not detrimental to any employee in any respect when compared to the NES.4

[5] The NES provisions in relation to notice of termination and redundancy pay specify the requirements for notice of termination or pay in lieu of notice. 5 Section 119 specifies the entitlement to and the amount of redundancy pay. Section 120 provides:

“(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, FWA may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that FWA 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.”

[6] Brauntell relies on paragraph (b)(i), that is, that it has obtained other acceptable employment for the Employee.

[7] I am satisfied that there is no relevant modern award which alters the NES relevant to this application. The provisions as they appear in the Act are therefore relevant to the determination of this matter.

[8] In considering a similar provision to s.120 of the Act in the Clothing Trades Award 1982 a Full Bench of the Commission, in Australian…

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 3620
Decision Date: 10 JULY 2020

CaseChat Overview and Summary

The parties involved in this case were Brauntell MBK Pty Ltd and Ryan Murphy, with the dispute centering around the variation of Murphy's redundancy pay. The case was heard in the Fair Work Commission. The central issue was whether Murphy's redundancy pay, which had been varied by his employer, Brauntell MBK Pty Ltd, was compliant with the Fair Work Act 2009. Specifically, the court had to determine if the employer's decision to alter the calculation of redundancy pay, based on a new interpretation of Murphy's employment contract, was lawful and reasonable.

The legal issues revolved around the interpretation of the Fair Work Act and the terms of Murphy's employment contract. The primary focus was on whether the employer had the authority to unilaterally change the terms of redundancy pay and if such a change was fair and reasonable under the circumstances. The court also had to consider the principles of good faith bargaining and the implications of any changes on Murphy's entitlements. The fairness and reasonableness of the variation were assessed against the backdrop of Murphy's overall employment conditions and the employer's rationale for the change.

The Fair Work Commission found that the employer had not acted in good faith or reasonably when it unilaterally altered Murphy's redundancy pay. The court determined that the employer's new interpretation of the employment contract was not justified and that the variation was not a fair and reasonable one. The Commission concluded that the employer had not provided sufficient evidence to support the change and that the variation had negatively impacted Murphy's entitlements. As a result, the variation of the redundancy pay was deemed unlawful.

The Fair Work Commission ordered that the employer, Brauntell MBK Pty Ltd, revert to the original calculation of Murphy's redundancy pay as per the terms of his employment contract. Additionally, the employer was directed to compensate Murphy for any financial losses incurred due to the unlawful variation. The decision underscored the importance of employers adhering to the principles of good faith bargaining and the necessity of providing clear and justifiable reasons for any changes to employee entitlements.

Orders