Epichealth Pty Ltd Trading as Epichealth Medical Clinic - Langwarrin v Pauline Naffaa
[2025] FWC 2119
•30 JULY 2025
| [2025] FWC 2119 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.120—Redundancy pay
Epichealth Pty Ltd Trading AS Epichealth Medical Clinic - Langwarrin
v
Pauline Naffaa
(C2025/3212)
| COMMISSIONER FOX | MELBOURNE, 30 JULY 2025 |
Variation of redundancy pay – Application to vary redundancy pay to nil – Application dismissed.
Epichealth Pty Ltd T/A Epichealth Medical Clinic – Langwarrin (Epichealth) has filed an application pursuant to s.120 of the Fair Work Act 2009 (the Act) seeking to vary the redundancy pay of Ms Pauline Naffaa. Ms Naffa objects to the application.
The matter was listed for a Case Management Conference. I subsequently issued Directions to the parties. The parties filed material in compliance with the Directions. The matter progressed to a Determinative Conference. Ms Naffaa and Ms Peggy Leung, Director of Epichealth, gave evidence.
In its Form F45A – Application to vary redundancy pay (Form F45A), Epichealth sought to vary Ms Naffaa’s redundancy pay to nil on the basis that it had obtained other acceptable employment for Ms Naffaa. For the reasons outlined below, I am not satisfied that Epichealth has obtained other acceptable employment for Ms Naffaa and therefore decline to vary her redundancy pay.
Background
Epichealth sold its medical centre, at which Ms Naffa was employed as a medical receptionist, to a new owner.
Epichealth contends that it obtained other ‘acceptable’ employment for Ms Naffaa within the meaning of s.120 of the Act. Epichealth says that ‘as part of the sale, Medusa Health Care Pty Ltd (Medusa) will continue to employ the staff for the same role at the same location.’[1]
Epichealth issued a notice of termination to Ms Naffaa on 15 April 2025 advising that her employment would cease on 28 April 2025. However, due to a delay in the sale of the business, the sale was not finalised until 30 May 2025. Ms Naffaa did not receive any communication regarding a change to her termination date and continued to attend work at Epichealth Medical Clinic – Langwarrin until the sale of the business was complete.
On 5 June 2025, Ms Naffaa was paid out her annual leave, and her accrued long service leave (LSL) was transferred to Medusa as part of the agreement for the sale of the business.
Ms Naffaa’s submissions outline the following reasons for objecting to the application to reduce her redundancy entitlement:
- She was advised on 28 March 2025 that her accrued LSL and all personal leave entitlements would not form part of her contract with Medusa;
- Her employment contract with Medusa stated that she would be on probation for 6-months wherein the company could terminate her by giving 7 days' notice; and
- As she was not paid out her personal leave, and had lost her accrued personal leave, she had to take leave without pay for a recent surgery.
Legislation and Case Law
Section 120 of the Act outlines as follows:
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.
Section 120 of the Act confers on the Commission a discretion to reduce the amount of redundancy pay to which an employee would otherwise have been entitled under s.119 of the Act.
Section 120(1) states that the section applies if an employee is entitled to be paid an amount of redundancy pay under s.119, and the employer ‘obtains other acceptable
employment’ for the employee. These are the jurisdictional facts that must be established
before the Commission can exercise its discretion. Section 120(2) of the Act states that the Commission ‘may determine that the amount of redundancy pay is reduced to a specified
amount (which may be nil) that the FWC considers appropriate’. If the Commission makes an order under s.120(2), the amount of redundancy pay to which the employee is entitled is the
reduced amount specified in the determination (s.120(3)).
Epichealth is not seeking to reduce the payment of redundancy pay to the affected employees because it cannot pay the amount owed. The principal questions for consideration in this matter are whether Epichealth ‘obtained’ employment for Ms Naffaa with Medusa and whether this employment can be considered ‘other acceptable employment’. If so, then I must decide whether to exercise my discretion to reduce the amount of Ms Naffa’s redundancy pay.
Consideration
Does Ms Naffaa have an entitlement to redundancy pay?
There is no dispute that Ms Naffa has an entitlement to be paid 4 weeks of redundancy pursuant to s.119 of the Act.
The Full Bench of the Commission in Australian Commercial Catering Pty Ltd v Powell and Togia; Powell v Australian Commercial Catering Pty Ltd[2] outlined the approach to be considered when in s.120 applications:
“[35] In considering an application made by an employer under s.120, the Commission must first consider whether either of the circumstances set out in paragraphs (a) or (b) of s.120(1) applies. Consideration under s.120 is enlivened upon an application being made by the employer for a reduction in the amount of redundancy pay otherwise payable under s.119. In dealing with such an application, the Commission must first determine whether the pre-conditions for the application of the section set out in s.120(1) are satisfied -that is, that the employee the subject of the application has an entitlement under s.119 to redundancy pay, and that the employer has either obtained other acceptable employment for the employee or cannot pay the redundancy entitlement.
[36] As was pointed out in the Full Court decision, “The origin of s 120 lies in the decision of the Full Bench of the Conciliation and Arbitration Commission in Termination, Change and Redundancy Case (1984) 8 IR 34 to introduce an entitlement to severance pay for all employees under federal awards whose employment had been terminated because of redundancy”. Cases decided in relation to award provisions established pursuant to those test case provisions are therefore relevant in the consideration of s.120. In relation to s.120(1)(b)(i), whether alternative employment obtained by the employer is “acceptable” is to be determined objectively, not by reference to whether the employment is subjectively acceptable to the employee. The determination of whether alternative employment is acceptable requires an assessment and value judgment on the part of the decision-maker. The employer “obtains” other acceptable employment when it acquires or gets the employment by its conscious, intended acts.
[38] Once it is concluded that the preconditions in s.120(1) are satisfied so that s.120 is applicable, it will be necessary for the Commission to determine under s.120(2) whether the employee’s entitlement to redundancy pay under s.119 should be reduced and, if so, by how much. This requires the exercise of a broad discretionary power. Any determination by the Commission for a reduced amount of redundancy pay then becomes the employee’s entitlement under s.119: s.120(3).”
·Acceptable employment is not identical employment, as no two jobs could be exactly the same.
·An employee must meaningfully cooperate with the employer in exploring or considering options for alternative positions.
·An employee’s prima facie entitlement to redundancy pay may be at risk if the employee refuses a role or position, which is found to be objectively ‘acceptable.’
(emphasis added)
Has Epichealth ‘obtained’ other acceptable employment for Ms Naffaa?
Epichealth says it obtained other acceptable employment for Ms Naffaa with Medusa. At the Determinative Conference, Ms Leung confirmed that she issued a Notice of Termination letter to Ms Naffaa on 15 April 2025, and that despite a delay in the sale of the business to Medusa, no other written correspondence was provided with respect to the employment. Ms Naffaa says she had discussions with the practice manager about Medusa when she received the contract of employment from them. It was Ms Leung’s evidence that she facilitated a visit by Medusa to the Langwarrin clinic so as to allow Medusa to engage with the staff and to see the clinic. It was Ms Leung’s evidence that she was not involved with this visit.
Based on the evidence before me, I cannot be satisfied that Epichealth obtained other acceptable employment for Ms Naffaa through its conscious, intended acts. Epichealth’s role can be summarised as facilitating an introduction, early in the sale process, and recommending to Medusa that they should consider Ms Naffaa for employment at the Langwarrin clinic. I consider that Epichealth then adopted a ‘hands-off approach’. This is demonstrated by the fact that it never met with Ms Naffaa to discuss with her the possibility of a role with Medusa, what pay and conditions would apply, and whether it was acceptable employment. I consider that this falls short of having ‘obtained’ Ms Naffaa a position at Medusa.
Having found that Epichealth did not obtain for Ms Naffaa employment with Medusa, it is not necessary to determine the issue of whether this employment was ‘other acceptable employment’. As I am not satisfied that Epichealth has ‘obtained’ other acceptable employment for Ms Naffa, I cannot proceed to vary the redundancy pay. I therefore determine to dismiss Epichealth’s application under s.120 of the Act. An Order[3] to this effect will be issued with this Decision.
COMMISSIONER
Appearances:
P Leung for Epichealth.
P Naffaa on her own behalf.
Determinative Conference details:
2025.
Melbourne (By Video using Microsoft Teams):
25 June.
[1] Form F45A page 5/6.
[2] [2016] FWCFB 5467.
[3] PR790189.
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