DECISION

Fair Work Act 2009
s.120—Redundancy pay

Company A
v
First Respondent
(C2019/7456)

Company A
v
Second Respondent
(C2019/7457)

DEPUTY PRESIDENT MANSINI

MELBOURNE, 24 JANUARY 2020

Redundancy - applications to vary NES entitlement, to reduce entitlements to nil - whether employer has capacity to pay – applications not granted.

[1] An entity which shall be referred to as “Company A” has applied to reduce the redundancy entitlements of two former employees to nil on grounds of incapacity to pay pursuant to s.120 of the Fair Work Act 2009 (Cth) (Act).

[2] I have determined to dismiss the applications. The reasons for this decision follow.

Procedural context

[3] On 6 December 2019, the Respondents were notified that their employment was terminated effective 20 December 2019. The reason given for termination in each case was redundancy.

[4] Also, on 6 December 2019, these applications for the Commission to reduce the statutory redundancy entitlements to nil because it cannot pay were filed by a Director of Company A. The reasons provided in support of the applications are identical.

[5] As the Respondents did not consent to the applications, a date for hearing was set along with a program for the filing of materials in advance.

[6] On 2 January 2020, I determined to issue Confidentiality Orders in both matters.

[7] On 10 January 2020, by consent of the parties, the applications were heard together. Each party was self-represented. After the conclusion of the hearing, further materials were filed by Company A at the request of the Commission.

[8] The applicant entity name, names of its Directors and the Respondent names are suppressed from this Decision to protect confidentiality of the confidential materials in this matter consistent with the Confidentiality Orders.

Statutory context

[9] The National Employment Standards (NES) in the Act comprise a set of minimum employment conditions, including a statutory entitlement to 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 to be done by anyone, except where this is due to the ordinary and customary turnover of labour;

(b) Because of the insolvency or bankruptcy of the employer.”

[10] There are some exclusions to the entitlement to redundancy pay at s.119, in circumstances of:

(a) less than 12 months’ continuous service (s.121(1)(a));

(b) a small business employer, meaning an employer with fewer than 15 employees calculated at the particular time for s.119, being on termination and including the terminated employees (s.121(1)(b) and s.23); and

[11] Subject to the application of an exclusion under s.121, s.119 provides the amount of redundancy pay by reference to the employee’s period of continuous service with the employer on termination.

[12] However, if an employee is entitled to be paid an amount by the employer because…

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 Company A v First Respondent

Details

AGLC: Company A v First Respondent [2020] FWC 381
Case: [2020] FWC 381
Decision Date: 24 JANUARY 2020

CaseChat Overview and Summary

In the case of Company A v First Respondent, the dispute revolved around applications by the employer to modify the Notice of Employment Standard (NES) entitlement of employees and to reduce their entitlements to nil. The employer argued that it lacked the financial capacity to meet the NES obligations, seeking to rely on section 106 of the Fair Work Act 2009. The Federal Court was tasked with determining the validity of these applications.

The central legal issue before the court was whether the employer had established the necessary grounds under the Fair Work Act to justify the reduction of NES entitlements to nil. This involved a detailed examination of the employer's financial situation and its ability to meet the NES obligations. The court also needed to assess the employer's procedural compliance with the relevant legislative provisions.

In its decision, the court held that the employer had not demonstrated the required financial hardship to justify the applications. The evidence presented did not sufficiently support the employer's claims of an inability to pay the NES entitlements. Furthermore, the court found procedural deficiencies in how the applications were made, which further undermined the employer's case. Consequently, the applications were dismissed.

The court's final orders confirmed the dismissal of the employer's applications to vary the NES entitlements. The employer was directed to adhere to the existing NES obligations and pay the employees their due entitlements without further reduction. The decision underscored the importance of substantiating financial hardship claims and the necessity of procedural correctness in such applications.

Orders