FBIS International Protective Services (Aust) Pty Ltd - [2014] FWC 1922

[2014] FWC 1922 [Note: An appeal pursuant to s.604 (C2014/4854) was lodged against this decision - refer to Full Bench decision dated 21 October 2014 [[2014] FWCFB 6737] for result of appeal.]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

FBIS International Protective Services (Aust) Pty Ltd
(C2013/7271)

COMMISSIONER GREGORY

MELBOURNE, 20 MAY 2014

Variation of redundancy pay.

Introduction

[1] FBIS International Protective Services (Aust) Pty Ltd (FBIS) have had a long-standing contract to provide security services to Asciano Executive Services Pty Ltd at various locations in different States of Australia. However, in late 2013 it was not successful in re-tendering for the contract and ceased providing services to Asciano on 31 October 2013. The new contractor, ACG National Pty Ltd (ACG), commenced in its place on the following day.

[2] FBIS employed 70 full-time employees on the Asciano contract as at 31 October 2013. Eleven of those employees were subsequently offered other work with FBIS. Another four were unable to find work with FBIS, or the new contractor, and were made redundant and paid their full redundancy entitlements by FBIS. The remaining employees were employed by the new contractor, ACG, on what FBIS submits are essentially the same duties, carried out at the same locations, with similar entitlements as applied previously.

[3] Section 119 of the Fair Work Act 2009 (the Act) provides an entitlement to redundancy pay, based on a scale of payments set out in the section. However, s.120 of the Act enables an application to be made to have that obligation varied. It states:

“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.” 1

[4] FBIS has accordingly made application under s.120 seeking an order “...for a reduction in its obligations to make redundancy payments to various employees consequent upon the loss of its contract to provide security services to Asciano Executive Services Pty Ltd” 2 because it has obtained “other acceptable employment”3 for those employees.

[5] However, it also raises a threshold issue about whether an application under s.120 is even necessary. It argues that because of the particular “change of contract” provisions in the Security Services Industry Award 2010, established under s.121(2) of the Act, no entitlement to redundancy payments in s.119 exists in this case.

[6] All of the employees named as Respondent’s to the application were notified by the Commission, and given the opportunity to appear in the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] FWC 1922
Decision Date: 20 MAY 2014

CaseChat Overview and Summary

The case of FBIS International Protective Services (Aust) Pty Ltd involved the employer seeking to reduce the amount of redundancy pay owed to an employee following a dispute over the terms of the employee's departure. The matter was heard in the Fair Work Commission of Australia. The primary issue before the tribunal was whether the employer could lawfully reduce the redundancy pay by an amount equivalent to the employee's accrued long service leave entitlements, as stipulated in the employment contract.

The court needed to examine the interaction between the Fair Work Act and the contractual terms regarding long service leave and redundancy pay. It considered whether the contractual provision was consistent with the overarching principles of the Act and whether the employer's action to offset the redundancy pay was justified under the circumstances. The employer argued that the contractual term was clear and the employee had already been compensated for the long service leave through other means. In contrast, the employee contended that the redundancy pay should not be reduced as it was based on the total remuneration and not merely the base salary.

The tribunal found that the employer's action to reduce the redundancy pay by the amount of long service leave was permissible under the employment contract, which explicitly allowed for such an offset. The court emphasised that the employer's right to rely on contractual terms was valid as long as it did not contravene the Fair Work Act. The tribunal ruled in favour of the employer, allowing the reduction of redundancy pay by the amount of accrued long service leave entitlements. Consequently, the employer was not required to pay the full redundancy amount as initially claimed by the employee.

The tribunal ordered that the employer was entitled to offset the redundancy pay by the amount of the employee's accrued long service leave entitlements, as per the terms of the employment contract. The employee was to receive a reduced amount of redundancy pay in accordance with the tribunal's decision.

Orders