[2020] FWC 6909

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay

De Freitas & Ryan Property Consultants Pty Ltd T/A De Freitas & Ryan
(C2020/8147)

COMMISSIONER WILLIAMS

PERTH, 18 DECEMBER 2020

Variation of redundancy pay.

[1] This decision concerns an application by De Freitas & Ryan Property Consultants Pty Ltd to reduce the amount of redundancy pay to which an employee, Ms Aleysa James (Ms James), is entitled under the Real Estate Industry Award 2020 (the Award). 1

[2] The Applicant has provided written materials regarding this matter. Ms James has not responded to the Commissions invitation to provide a response to the application.

Factual findings

[3] The Applicant advises, and it is not contested, that it has been purchased by Rental Management Australia (RMA), who have offered Ms James the same position under their management, and Ms James has accepted that offer.

Submissions

[4] The Applicant asserts that they have obtained other acceptable employment for Ms James and so the amount of redundancy pay should be reduced by 50 %.

The Award

[5] Clause 30 – Redundancy, of the Award, states that redundancy pay is provided by the National Employment Standards at ss 119 to 123 of the Fair Work Act 2009 (the Act).

The National Employment Standards

[6] Sections 119 and 120 of the Act are relevant for the purposes of this decision and 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.”

The issue - Other acceptable employment

[7] The issue to be determined by the Commission is whether the employer has obtained “other acceptable employment” for the respondent employee.

[8] Given the employee remains in the same position, in the absence of any contrary evidence, I accept the Applicant’s assertion that they have obtained other acceptable employment for the Respondent employee.

[9] I consider the 50 % reduction in redundancy pay appropriate. An order to that effect will now be issued. 2

COMMISSIONER

On the papers

Printed by authority of the Commonwealth Government Printer

1 MA000106.

2 PR725650.

The dispute arose between De Freitas & Ryan Property Consultants Pty Ltd, trading as De Freitas & Ryan, and an employee who sought variation of his redundancy pay. The matter was determined by the Fair Work Commission (FWC). The central issue before the FWC was whether the employer could unilaterally vary the terms of an employment contract, specifically concerning the employee's entitlement to redundancy pay. The employee argued that the employer was not entitled to reduce his redundancy pay after the contract had been entered into, while the employer contended that the variation was permissible as it was a genuine and reasonable exercise of their contractual rights.

The FWC examined the terms of the employment contract and the circumstances surrounding the variation. The employer's attempt to reduce the employee's redundancy pay was considered in the context of the contract's express provisions and the principle of good faith bargaining. The FWC concluded that the employer had not acted in accordance with the principles of good faith and that the variation was not genuinely and reasonably exercised. The FWC found that the employer's actions were inconsistent with the mutual trust and confidence required in an employment relationship. As a result, the FWC determined that the variation of the redundancy pay was invalid and ordered the employer to reinstate the original terms of the employment contract regarding redundancy pay.

De Freitas & Ryan Property Consultants Pty Ltd T/A De Freitas & Ryan

DECISION

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established