COSA Cranes Pty Ltd
[2016] FWC 5090
•27 JULY 2016
| [2016] FWC 5090 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.120—Redundancy pay
COSA Cranes Pty Ltd
(C2016/4345 to C2016/4347)
COMMISSIONER WILLIAMS | PERTH, 27 JULY 2016 |
Variation of redundancy pay.
[1] This decision concerns three applications (C2016/4345 to C2016/4347) made under section 120 of the Fair Work Act 2009 (the Act) by COSA Cranes Pty Ltd (COSA Cranes).
[2] COSA Cranes leases cranes and earthmoving equipment in the construction, building, mining and domestic industries across Australia.
[3] A decision was made to close the company due to a down turn in business. These applications are made by COSA Cranes on the basis it is unable to pay the employees’ redundancy entitlement.
[4] My preliminary view was that these applications were unable to be made because the employees’ entitlement to redundancy pay arose under an industry specific redundancy scheme which did not provide any ability for an employer to make an application to vary these redundancy pay entitlements.
[5] COSA Cranes was invited to provide submissions to the Commission in support of its applications but has not sought to do so.
The legislation
[6] The relevant sections of the Act dealing with redundancy pay are set out below:
“Subdivision B—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 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 |
7 | At least 7 years but less than 8 years | 13 weeks |
8 | At least 8 years but less than 9 years | 14 weeks |
9 | At least 9 years but less than 10 years | 16 weeks |
10 | At least 10 years | 12 weeks |
120 Variation of redundancy pay for other employment or incapacity to pay
(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, the FWC may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that the FWC 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.
121 Exclusions from obligation to pay redundancy pay
(1) Section 119 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 as described in subsection 117(1) (whichever happened first):
(a) the employee’s period of continuous service with the employer is less than 12 months; or
(b) the employer is a small business employer.
(2) A modern award may include a term specifying other situations in which section 119 does not apply to the termination of an employee’s employment.
(3) If a modern award that is in operation includes such a term (the award term), an enterprise agreement may:
(a) incorporate the award term by reference (and as in force from time to time) into the enterprise agreement; and
(b) provide that the incorporated term covers some or all of the employees who are also covered by the award term.
Subdivision C—Limits on scope of this Division
123 Limits on scope of this Division
...
Other employees not covered by redundancy pay provisions
(4) Subdivision B does not apply to:
(a) an employee who is an apprentice; or
(b) an employee to whom an industry-specific redundancy scheme in a modern award applies; or
(c) an employee to whom a redundancy scheme in an enterprise agreement applies if:
(i) the scheme is an industry-specific redundancy scheme that is incorporated by reference (and as in force from time to time) into the enterprise agreement from a modern award that is in operation; and
(ii) the employee is covered by the industry-specific redundancy scheme in the modern award; or
(d) an employee prescribed by the regulations as an employee to whom that Subdivision does not apply.”
[7] As can be seen from the above sections of the Act an employer can, under section 120, apply to vary the redundancy pay where that is required to be paid by section 119; either because they have obtained other acceptable employment for the employee or because the employer is unable to pay the redundancy pay. These are the applications that COSA Cranes has made with respect to each of the three employees.
[8] However section 123 of the Act says that Subdivision B, which includes sections 119 to 122, does not apply to an employee to whom an industry specific redundancy scheme in a modern award applies.
[9] The employees’ entitlement to redundancy pay arises under the Mobile Crane Hiring Award 2010 [MA000032] (the Award).
[10] The Award contains the following clause:
“12. Industry specific redundancy scheme
12.1 The following redundancy clause for the mobile crane hiring industry is an industry specific redundancy scheme as defined in s.12 of the Act. In accordance with s.123(4)(b) of the Act the provisions of Subdivision B—Redundancy pay of Division 11 of the NES do not apply to employers and employees covered by this award.
12.2 Definitions
(a) Redundancy means any employment situation where the number of employees reasonably required by the employer exceeds the number required to perform the work which is available.
(b) Any one of the following factors may operate to reduce the amount of work which is available:
(i) closure of a company;
(ii) a decline in trade or business opportunities;
(iii) technological change or changes in the industry; or
(iv) a decision by a company to cease providing a particular service performed by its employees in a locality or from a site or depot.
(c) Retrenchment means termination of an employee who is made redundant in accordance with any of the circumstances covered by clause 12.2(b).
(d) For the purpose of this clause, continuous service means service that will be deemed to be continuous notwithstanding an employee’s absence from work for any of the following reasons:
• annual leave, personal leave or parental leave;
• illness or accident up to a maximum of four weeks after the expiration of paid sick leave;
• jury service;
• injury received during the course of employment and up to a maximum of 26 weeks for which the employee received workers compensation;
• where called up for military service for up to three months in any qualifying period;
• long service leave;
• any reason satisfactory to the employer, provided that the reason will not be deemed satisfactory unless the employee has informed the employer within 24 hours of the time when the employee was due to attend for work, or as soon as practicable thereafter, of the reason for the absence and probable duration.
12.3 Payment instead of notice
In supplementation of the NES, this subclause provides additional notice entitlements, to operate to the extent that the entitlements exceed those in the NES.
(a) Employees with more than 12 months continuous service will be entitled to receive four weeks pay at ordinary rates instead of notice.
(b) Employees with less than 12 months continuous service, other than casuals will be entitled to notice on the following basis:
(i) up to three months¬—one week;
(ii) more than three months up to six months—two weeks;
(iii) more than six months up to nine months—three weeks; or
(iv) over nine months—four weeks.
(c) An employee will be paid instead of such notice or be required to work one week of such notice and be paid any balance instead.
12.4 Retrenchment payments
(a) Retrenched employees with more than 12 months service, will be entitled to three weeks pay, at the ordinary rate of pay for each completed year of service and pro rata payments for any uncompleted final year up to a maximum of 27 weeks’ pay.
(b) Provided that any employee who had at 16 September 1994 accrued any entitlements of more than 27 weeks’ pay will be entitled to the number of weeks entitlement accrued at that date with payment at the ordinary rate of pay applicable at the date of retrenchment.
12.5 Other entitlements
In addition to the entitlements prescribed in clauses 12.3 and 12.4, retrenched employees are entitled to the following additional benefits:
(a) payment of public holidays occurring within 20 working days of the final day of employment;
(b) pro rata annual leave plus loading of 17.5%; and
(c) accumulated sick leave to a maximum of 10 days.
12.6 Transfer of business
(a) Except where an employee has received redundancy benefits, where a business is transferred from an employer (in this subclause called the old employer) to another employer (in this subclause called the new employee) and an employee who at the time of such transfer was an employee of the old employer in that business becomes an employee of the new employee.
(i) the continuity of the employment of the employee will be deemed not to have been broken by reasons of such transfer; and
(ii) the period of employment which the employee has had with the old employer or any prior old employer will be deemed to be service of the employee with the new employer.
(b) In this subclause, business includes trade, process, business or occupation and includes part of any such business and transfer includes transfer, conveyance, assignment or succession whether by agreement or by operation of law and transferred has a corresponding meaning.”
[11] Because the redundancy provisions in the Award is described as an industry specific redundancy scheme section 123 of the Act means employees covered by the Award do not receive the redundancy payments provided by section 119 of the Act. Instead employees to whom the Award applies are entitled to the redundancy pay provided by this clause of the Award.
[12] Importantly however the Award does not specify that there is any ability for an employer to make an application to vary these redundancy pay amounts.
[13] As explained above an application under section 120 of the Act can only be made by an employer where the employee is entitled to redundancy payments under section 119 of the Act. That is not the case for these three employees. They are entitled to redundancy pay under the Award not under section 119 of the Act. Consequently there is no legal basis for the applications made by COSA Cranes to vary the application for these three employees.
Conclusion
[14] The three applications by COSA Cranes to vary the redundancy payments required to be paid have no basis under the legislation. The applications concerning these three employees must be dismissed and there is no variation to their redundancy pay entitlement which is provided for in the Award.
[15] Consequently the Commission will now dismiss these applications and an order to that effect will be issued.
COMMISSIONER
Printed by authority of the Commonwealth Government Printer
<Price code C, PR583387>
0
0
1