Escare Incorporated v Ms Ellen Moffat

[2011] FWA 3342

[2011] FWA 3342

FAIR WORK AUSTRALIA

DECISION

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

Escare Incorporated
v
Ms Ellen Moffat; Ms Jennifer Potae
(C2011/4171)

COMMISSIONER CLOGHAN PERTH, 31 MAY 2011

[1] On 27 April 2011, Escare Incorporated (“the Employer”) made application to vary the redundancy pay otherwise due under the National Employment Standards to employees listed below in paragraph [4].

[2] The application is made pursuant to s.120 of the Fair Work Act 2009 (“the FW Act”). The Employer states in its application that:

“Escare Incorporated is a not for profit organisation in Esperance WA [Western Australia]. Escare runs a number of funded services and has no equity to cover the additional cost of paying redundancy to employees in any of the services. Funding can only be used for delivery of the services Escare provides as directed by the funding body. This does not include redundancy payments.”

[3] For the purposes of the FW Act, the application is made pursuant to s.120(1)(b)(ii) that the Employer cannot pay the amount.

[4] The employees subject to the application, their commencing date of employment and current weekly hours of employment are as follows:

Ms Ellen Moffat	5.12.2005	26 hours
Ms Jennifer Potae	11.8.2008	18 hours

[5] The application was the subject of a telephone procedural conference on 13 May 2011 and a video hearing on 17 May 2011.

[6] At the hearing, the following made submissions:

Ms L Trocinski	Coordinator
Ms J Aberle	Coordinator
Mr S Beros
Ms E Moffat
Ms J Potae
Mr A Moffat (present)

BACKGROUND

[7] Escare provides assistance, among other areas, in financial counselling. Funding for financial counselling comes from the Department of Child Protection.

[8] Escare advised, in its application, that funding is provided for one full time counsellor. However, two part time counsellors are currently employed whose hours exceed one full time person. Further, the costs associated with employing two people also exceed the funding provided by the Department of Child Protection. Accordingly, Escare has made a decision to restructure the employment profile and make redundant the two part time positions and advertise a position for one full time Financial Counsellor. Both current employees would be eligible to apply for the full time position. Should one of the current part time employees be successful in obtaining the position, both understand that they would not be eligible for redundancy pay.

[9] The Applicant provided evidence that for the Financial Counselling sector of Escare, there was a surplus of $442.00 in the 2008 - 2009 financial year and a deficit of $12,449.00 in the 2009 - 2010 financial year.

[10] I have been provided with the Independent Auditor’s Report for Escare Incorporated for the financial year 2009 - 2010 and a financial statement to March 2011. I am satisfied that the grounds upon which the Applicant has sought to vary redundancy pay because it cannot pay, has been made.

[11] Notwithstanding this finding, I note that pursuant to s.121(1)(a), the Applicant is a small business - that is, it employs less than 15 employees and consequently is excluded from the obligation to pay redundancy pay at the time of making the employees redundant.

[12] I have come to the conclusion that the Applicant is a small business and is excluded from paying redundancy however, I make two observations. Firstly, the cause of this action is the Management Committee’s decision to restructure. The decision, may be for good reasons, but the result may be one or two part time employees will lose their jobs. In doing so, the Management Committee expressed a desire that if they could, they would pay redundancy pay but the provision of redundancy pay is not included as part of the Service Agreement with the Department of Child Protection. While I have come to the conclusion that the Employer does not have to pay redundancy pay, to all intents and purposes, Escare is providing a service and employing persons for the Department of Child Protection and this service delivery model, enables the Department to avoid the obligations it would attract, if it was employing the persons directly.

CONCLUSION

[13] Pursuant to s.121(1)(b) of the FW Act, I am satisfied that Escare Incorporated is a small business and excluded from the obligation to make redundancy pay.

COMMISSIONER

Appearances:

Ms L Trocinski, Ms J Aberle and Mr S Beros for the Applicant

Ms E Moffat, on her own behalf.

Ms J Potae, on her own behalf.

Hearing details:

2011

Perth

May 17

Printed by authority of the Commonwealth Government Printer

<Price code A, PR509993>