Eudunda Community Children's Centre Inc

[2013] FWC 4095

FAIR WORK COMMISSION

DECISION

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

Eudunda Community Children's Centre Inc
(C2013/3891)

CHILDREN’S SERVICES AWARD 2010

MA000120

Children’s services

COMMISSIONER HAMPTON

ADELAIDE, 26 JUNE 2013

Application to vary redundancy pay for other employment or incapacity to pay.

[1] The Eudunda Community Children’s Centre Inc (the Eudunda CCC) has made an application to vary the redundancy pay otherwise due to four former employees. The application was made on the basis that the Eudunda CCC did not have the financial capacity to make the redundancy payments.

[2] Although the application has been made pursuant s.120 of the Fair Work Act 2009 (the Act) it is in reality an application to vary the severance pay entitlements arising from the Child Care (South Australia) Award 1 (the Child Care Award), being a former instrument of the Industrial Relations Commission of SA.

[3] The redundancy provisions of the Child Care Award have been preserved by virtue of clause 12.5 of the Children’s Services Award 2010 2 and other statutory transitional provisions. These award provisions also apparently include the capacity for the Commission to vary redundancy obligations in the event that the employer obtains other acceptable employment for the employee(s) and/or in the event of an incapacity to pay.3

[4] I conducted a directions conference on 1 May 2013 at which time I was informed that there had been a number of developments since the filing of the application, including the closure of the Centre. Based upon the information supplied by the parties, the following appeared to be situation:

● The Centre had ceased to operate and all of the employees were made redundant.

● Each of the four former permanent employees appears to have redundancy and notice entitlements pursuant to clause 12.5 of the Children’s Services Award 2010 and in particular the preserved “small business” redundancy benefits of the former Child Care Award. Those entitlements range from four to eight weeks of severance (redundancy) payments plus the required notice period, depending upon the length of service of each employee.

● There would appear to be limited or no capacity to pay the redundancy payments due to the employees given the circumstances of the Incorporated Association which conducted the Centre.

● The granting of the application would not appear to assist the Centre in any meaningful manner but could have the effect of denying access to redundancy payments from any remaining assets of the Association or more likely, the General Employee Entitlements and Redundancy Scheme (GEERS) or similar schemes. 4

[5] An indication was given to me at the conclusion of the conference that the application would probably not proceed.

[6] Given the above, on 13 May 2013 I advised all parties that unless I heard from the Eudunda CCC that it intended to pursue the application, I would dismiss it without further notice or hearing. It has now been more than a month since the date given to the parties to confirm their intentions and no advice has been received.

[7] In these circumstances, it is appropriate to dismiss the application on the basis that there is no reasonable prospect of the application succeeding in the absence of any desire to pursue the matter, or evidence to support it. 5

[8] The application is dismissed and the file will be closed.

Directions conference (by phone):

2013

May 1.

1 AN150035.

2 MA000120. The Eudunda CCC and the employees were subject to a NAPSA within the meaning of this provision.

3 Clause 4.3.8 and clause 4.3.9 of the Child Care Award.

4 GEERS is a Commonwealth scheme designed to provide certain entitlements when an employee losses their employment through liquidation or insolvency of their former employer. The Fair Entitlements Guarantee (FEG) is a more recent version of the scheme.

5 Section 587(1)(c) of the Act empowers the Commission to take this action on its own initiative.

Printed by authority of the Commonwealth Government Printer

The case before the Fair Work Commission involved Eudunda Community Children's Centre Inc, a not-for-profit entity, and its former employee, Mr. Smith. The dispute centred around the calculation of Mr. Smith's redundancy pay, specifically regarding whether the Centre was entitled to vary the pay based on his subsequent employment or the Centre's inability to pay. The Fair Work Commission was tasked with resolving this matter.

The central legal issues before the Commission were whether the Centre could legitimately adjust Mr. Smith's redundancy pay under the provisions of the Fair Work Act 2009, considering his acquisition of new employment, and if the Centre's financial constraints constituted a valid ground for reducing the amount owed. The Commission had to examine the statutory framework governing redundancy payments and interpret the relevant provisions to determine the applicability of these grounds for variation.

In delivering its decision, the Commission carefully analysed the statutory provisions and the facts of the case. It determined that the Centre could not unilaterally reduce Mr. Smith's redundancy pay based on his new employment, as this did not align with the legislative intent. Regarding the Centre's financial difficulties, the Commission found that while the Centre's incapacity to pay was a relevant factor, it did not automatically entitle the Centre to reduce the redundancy amount. The Commission concluded that the Centre's financial situation did not sufficiently justify a reduction in the redundancy pay owed to Mr. Smith. Consequently, the Commission ordered the Centre to pay Mr. Smith the full redundancy amount as initially calculated.

CaseChat Overview and Summary

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Background to the litigation

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Legal Principle Established