Fink and Secretary, Attorney-General's Department - [2021] AATA 734

Fink and Secretary, Attorney-General's Department [2021] AATA 734 (31 March 2021)
Division:GENERAL DIVISION
File Number(s): 2019/3393
Re:Gary Fink
APPLICANT

AndSecretary, Attorney-General's Department
RESPONDENT

DECISION
Tribunal:Ms A E Burke AO, Member
Date:31 March 2021
Place:Melbourne

The Tribunal affirms the decision under review.
....................[sgd]....................................................
Ms A E Burke AO, Member
Catchwords
EMPLOYMENT - fair entitlements guarantee - entitlement to redundancy payment - when did employment cease - whether Applicant was employed by a small business – the interaction of the Corporations Act and Fair Entitlement Guarantee Act – insolvency principles - decision affirmed.
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Corporations Act 2001
Fair Entitlements Guarantee Act 2012
Fair Work Act 2009
Cases
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd (2014) 251 CLR 640
Commissioner of Taxation v The Trustee for the Michael Hayes Family Trust [2019] FCAFC 226
Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297
Jones v Matrix Partners Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liq) (2018) 260 FCR 310
Mi and Secretary, Department of Employment [2016] AATA 419
Bullivant and Secretary, Attorney-General's Department [2020] AATA 2047
Kita and Secretary, Department of Employment [2016] AATA 214
Kable and Secretary, Attorney General’s Department [2019] AATA 3963
Gayed and Secretary, Department of Jobs and Small Business [2019] AATA 1132
REASONS FOR DECISION
Ms A E Burke AO, Member

Mr Fink (the Applicant) is seeking a second tier review of the decision made by the Secretary, Department of Jobs and Small Business (the Respondent) that he was entitled to a Fair Entitlement Guarantee (FEG) advance for wages and annual leave, but was not entitled to a redundancy payment.
On 19 December 2018 the decision-maker at the FEG branch advised Mr Fink he was entitled to an advancement of FEG in the amount of $10,902.67 comprising $490.20 for unpaid wages, $608.47 for annual leave, $9804.00 for payment in lieu of notice (PILN) and $0.00 for redundancy.
On 16 May 2019, following Mr Fink’s request for a review of the determination, the decision maker at the FEG review team determined Mr Fink was entitled to an additional week’s payment for PILN as his Employment Agreement provided for five weeks PILN; but upheld the determination that Mr Fink had no entitlement to redundancy either by reference to his Employment Agreement, or to the Fair Work Act 2009.
On 12 June 2019 Mr Fink sought a review of the FEG branch decision-maker’s determination by this division of the Tribunal. His reasons for seeking a review were that:
The Fair Entitlement Guarantee (FEG) has determined that I am not eligible for an advance relating to redundancy based on the following reasons:
my employment contract included the following clause regarding my entitlement to redundancy: 'If you have completed 12 months' continuous service, on termination of your employment in circumstances of genuine redundancy you will be entitled to redundancy pay in accordance with the National Employment Standards";
FEG's position is that the reference in my employment contract to the National Employment Standards (NES) was not specific, and therefore means a reference to the NES as a whole;
as the NES falls under the Fair WorkAct (FW Act), and the FW Act dictates that my employer was a 'small business employer' (fewer than 15 employees) at the time of my redundancy, FEG state my employer is therefore exempt from the obligation to pay redundancy; and
the timing for testing when an employer is a small business employer under the FW Act is the date of your redundancy, and the Corporations Act and deeming provisions under section 558 (1) with respect to crystallisation of entitlement on the appointment of an insolvency practitioner are not relevant in determining the time when an employer was a small business employer or not.
l, and the liquidators of Unlockd Operations Pty Ltd (In Liquidation) (my employer), firmly consider that I had a contractual right to redundancy.
The reference to the NES in the redundancy clause in my employment contract was only intended as a reference to the calculation matrix for determining redundancy. This has been confirmed by the former head of HR who oversaw the preparation of my contract, who stated that it was management's intention that employees have a contractual right to redundancy and that it is common industry practice to refer to the NES for the redundancy calculation matrix. It was not the intention of the contract that Unlockd would be exempt from paying my redundancy, otherwise my contract would have been silent on redundancy (which had been the case in previous contracts entered with Unlockd).
Additionally, Iconsider that the application of section 558(1) of the Corporations Act 2001 , which has the effect of deeming the dismissal of all employees effective at the date of the commencement of the liquidation (defined as the date of the appointment of the administrators) means the date the small business employer test should be applied is the date of the Voluntary Administrators’ appointment (12 June 2018). At that time Unlockd employed 33 staff. This interpretation would avoid the apparent inequity of the application of the small business employer rules in an insolvency context, when a staged wind down involving a gradual redundancy program where a going concern sale cannot be achieved is a common outcome (as was the case for Unlockd). Whilst FEG consider the Corporations Act is not capable of altering the FW Act, this interpretation does not have this effect; rather it ensures the consistent and equal treatment of all employees that may be made redundant through a formal insolvency process by deeming that to have occurred at the Stan [sic] of that process.
At the hearing of this application on 14 October 2020 by video, Mr Fink was represented by Mr C E A Hibbard of counsel, instructed by McGrath Nicol Liquidators. Ms R W Sweet of counsel, instructed by Ms Cooke of HWL Ebsworth Lawyers, appeared for the Attorney General. The Attorney General lodged a set of paginated documents under s 37 of Administrative Appeals Tribunal Act 1975 (Cth) (the T-Documents) and the Applicant gave evidence at the hearing.
BACKGROUND / EVIDENCE
On 4 January 2016 Mr Fink commenced work with Unlockd Operation as a Product Manager and on 1 July 2017 was promoted to a Senior Product Manager. Unlockd Operations was described as an Australian-based technology start-up that had developed and patented a unique advertising and content serving process for Android smart phones.
On 12 June 2018 Unlockd Operation was placed into voluntary administration. At the time the company employed 33 staff, including Mr Fink. In a document prepared for the Tribunal, the Liquidators advised:
By way of background, ….. were appointed voluntary administrators of Unlockd Operations Pty Ltd (Unlockd Operations) (part of a group of company’s [sic] operating a technology start up business) by the company’s directors on 12 June 2018. At that time the company employed 33 staff, including Mr Fink.
The Administrators undertook an immediate assessment of the financial position of the company and in light of limited available resources, promptly commenced a strategy to offer the business for sale as a going concern. This approach was pursued to comply with their statutory obligation to endeavour to preserve the business and the employment of its staff as fully as possible or, as far as possible, realise the assets for a greater return than a liquidation.
However, as part of the Administrators’ initial assessment of the Group’s operations, the Administrators formed the view that there were insufficient funds available to maintain the full workforce employed on 12 June 2018, and consequently 11 employees were terminated on 13 June 2018. In the two weeks following, another eight staff were made redundant on various dates and two resigned from their employment. The staff that had met the one-year service requirement to claim redundancy have claimed and been paid for these entitlements by the Respondent.
Those staff that were retained beyond the end of June 2018 were critical to the success of the attempts to sell the business as a going concern. Regrettably the going concern sale process did not elicit a sustainable offer for the business and on 20 July 2018 the employment of the majority of the remaining 12 staff, including Mr Fink, was terminated on the ground of redundancy.
After the Applicant’s FEG claim for redundancy was refused a review was sought (under s.37 of the FEG Act), however FEG determined to uphold its original decision in disallowing Mr Fink’s claim for redundancy. This resulted in the current appeal to the AAT.
In summary, this is a situation where the employees of the same company, subject to employment contracts with near identical provisions with respect to entitlement to redundancy, being dismissed within approximately five weeks of each other in the course of an insolvency appointment are being treated entirely inconsistently as a result of the approach being taken by the Respondent.
On 20 July 2018 Mr Fink was terminated on the grounds of redundancy, at which point the company employed fewer than 15 staff.
On 17 October 2018, following an unsuccessful attempt to sell the business, McGrath Nicol were appointed as liquidators of Unlockd Operations.
The Administrators’ Report to Creditors dated 10 October 2018 outlines the key events leading to the appointment of Administrators. It advises:
On 20 September 2017, Google temporarily disabled AdMob serving to Unlockd, and alleged that the app was not in compliance with AdMob policies. AdMob services were re-enabled on 20 October 2017. On 23 January 2018 Google notified Unlockd that it had until 31 March 2018 to amend its app, or risk being denied access to AdMob. Company records indicate that on 2 March 2018 Google notified Unlockd that it had formed the view that the Unlockd apps also contravened Google Play policies.
The parties were ultimately unable to reach a negotiated solution, and in early April 2018 Unlockd Limited and its UK subsidiaries sought an injunction in the UK High Court preventing Google from banning its access to the Google Play Store and AdMob. The UK injunction was granted on 9 May 2018, and a similar injunction was sought and granted by the Australian Federal Court on 31 May 2018.
As it [sic] typical for a start-up technology business Unlockd invested significantly in the commercialisation of its patented technology and as such incurred significant operating losses since its formation in 2015. For this reason, equity funding was critical to fund its day to day operations and ongoing expansion. Whilst the Group intended to publicly list in May 2018, the IPO plans were placed on hold following escalation of the dispute with Google, given its potential impact on the Group's business model and financial position.
In the absence of a public equity raise, Unlockd concurrently commenced a business sale and private capital raise process with its existing shareholders during May 2018 to raise funds to enable the business to continue trading and pursue its action against Google. Some shareholders provided conditional funding commitments, but ultimately on 11 June 2018 the capital raise failed when insufficient funding commitments were able to be secured.
The Directors consider that the aforementioned actions taken by Google led to the Group's demise such that subsequent capital raising required to fund the ongoing operations and Google Proceedings was ultimately materially undersubscribed. The Directors reviewed Unlockd Australia's position and determined that the Australian entities were insolvent and resolved to appoint voluntary administrators…
The Administrators consider that the primary reason for Unlockd Australia's failure was the unresolved dispute with Google, given Unlockd's access to Google's Play Store and AdMob platforms was critical to its business model. The dispute and subsequent legal action impeded Unlockd Australia's capacity to raise sufficient capital for the business to continue to trade.
On 16 May 2019 the FEG review office advised Mr Fink:
Request for review
In your review request, your agent, Mr Christopher Hodge, advised the department that you disagreed with the original decision regarding your entitlements to PILN and redundancy. With regard to your PILN entitlement Mr Hodge stated that you are eligible for 5 weeks of PILN under your employment contract.
In relation to your redundancy entitlement, Mr Hodge claimed that:
You had a contractual right to redundancy as outlined in clause 9.10 of your employment contract; and
The Corporations Act 2001 (the Corporations Act) provides that the relevant time for testing whether an insolvent business is a small business employer is the date of the insolvency practitioner's appointment.
In support of your review, you provided us with a copy of your Employment Agreement.
Review decision
While I have accepted that you have an entitlement to 5 weeks PILN under your Employment Agreement, I am not satisfied that a redundancy entitlement is payable either by reference to your Employment Agreement, or to the Corporations Act.
I have accordingly decided to set aside the original decision made on 19 December 2018, and I have substituted a new decision, the effect of which is that you are eligible for an additional FEG advance for 1 week of PILN, capped at $2,451.00 (before tax).
Reasons for the review decision
PILN
Section 6(4) of the FEG Act states that the person's PILN entitlement is the amount the person is entitled to under the governing instrument from the employer for a shortfall in the period of notice of termination of the employment. A 'governing instrument' is defined in section 5 of the FEG Act to mean a written law of the Commonwealth, a State or Territory, an award, determination, or a written instrument or agreement.
The governing instrument applicable to your claim for PILN was your Employment Agreement. Clause E.2 of the Employment Agreement states that the company may terminate the Agreement by giving the employee at least 4 weeks' notice. This clause also provides for an extra week, if the employee is over 45 years old and has completed more than 2 years continuous service with the company.
As you did not receive notice of termination, were 45 years old at the time of termination and had a length of service of 2.54 years, you therefore have an entitlement to 5 weeks of PILN.
Section 26 of the FEG Act provides that where a claimant's weekly wage rate is greater than the maximum weekly wage rate, the FEG advance will be calculated as if the claimant was earning the maximum weekly wage rate at the end of the employment. Section 5 of the FEG Act defines the maximum weekly wage rate as $2,451.00.
As your verified weekly wage rate of $3,076.92 was greater than the FEG maximum weekly wage rate of $2,451.00, your FEG advance is capped as if you were earning $2,451.00 per week.
Therefore, you are eligible for a total FEG advance of $12,255.00 for PILN. As you have already received an advice of $9,804.00 (4 weeks) for PILN as part of your initial assessment, you are eligible for an additional $2,451.00 in respect of this matter.
Redundancy pay
Section 6(5) of the FEG Act provides that a person's redundancy pay entitlement is the amount of redundancy pay the person is entitled to under the governing instrument from the employer for the termination of employment.
The governing instrument applicable to your claim for redundancy pay was the Employment Agreement. Clause 9.10 of the Employment Agreement states that if you have completed 12 months' continuous service, on termination of your employment in circumstances of genuine redundancy you will be entitled to redundancy pay in accordance with the National Employment Standards (the NES) as contained in the FW Act.
Section 121(1)(b) of the FW Act provides that the redundancy pay provisions of section 119 of the FW Act do not apply to the termination of an employee's employment if immediately before the time of termination, or at the time when the person was given notice of termination (whichever happened first) the employer was a small business employer.
Section 23(1) of the FW Act provides that a small business employer is one that employs fewer than 15 people.
While an argument was put forward at review that the Employment Agreement contained an express contractual right to redundancy, and that the only relevance of the NES reference was to determine the quantum of redundancy payable under section 119(2) of the FW Act, the Employment Agreement makes reference to the NES as a whole and does not specify or limit the reference to the NES.
Based on information provided by the insolvency practitioner for the company, at the time of your termination on 20 July 2018, the company employed 14 employees. As such, at the relevant date, the company was a small business employer.
Mr Hodge also raised an argument on your behalf that the relevant date for assessing the size of the employer should be the date of the insolvency practitioner's appointment, being 12 June 2018, due to the application of section 558(1) of the Corporations Act.
Section 558(1) of the Corporations Act states that:
(1) Where a contract of employment with a company being wound up was subsisting immediately before the relevant date, the employee under the contract is, whether or not he or she is a person referred to in subsection (2), entitled to payment under section 556 as if his or her services with the company had been terminated by the company on the relevant date.
It is the FW Act, rather than the Corporations Act which is the relevant governing instrument for your employment. There is nothing in the FW Act which refers to section 558(1) of the Corporations Act. Section 558(1) of the Corporations Act does not make provision for the payment of redundancy, such that this provision can be the basis for an employment entitlement that is not available under the FW Act. In contrast to the FW Act, which makes general provision for redundancy, section 558(1) of the Corporations Act has a limited scope. Section 558(1) operates in relation to determining the priority order of payments in a winding up.
As such, section 558(1) of the Corporations Act is not capable of altering section 119 and 121 of the FW Act so that the time of termination in subsection 121(1) of the FW Act could be said to be the date of the insolvency practitioner's appointment.
Therefore, as Unlockd Operations Pty Ltd was a small business employer at the relevant date, you do not have an entitlement to redundancy pay in accordance with section 121(1)(b) of the FW Act. As such, you are not eligible for a FEG advance in respect of redundancy.
An un-dated Statement of Evidence from Ms Jane Martino, former Chief Executive Officer (and Chief Operating Officer) of Unlockd Operations, asserts:
When drafting Unlockd Operations’ employment contracts, I was aware that Management intended to provide employees with a contractual right to redundancy through the inclusion of a specific clause that related to redundancy. In earlier versions of Unlockd Operations’ employment contracts, no specific clause regarding redundancy was included and this change in practise reflected a new intention to give contractual recognition of redundancy entitlements. It is my understanding that it was management's intention that the reference to the National Employment Standards (NES) in the redundancy clause of Unlockd Operation's employment contracts was for calculation purposes only. To my knowledge there was no intention to adopt the small business exclusions from the Fair Work Act.
In my view, it is incorrect to infer that the reference in Unlockd Operations' redundancy clause to the NES meant that the entire NES should be referenced, as if this was the intended outcome, Unlockd Operation's contract would have instead have been silent on redundancy rights, meaning employees' rights would have defaulted to the NES.

Mr Fink relied upon his written statement at the hearing, which clearly articulated his firm belief that he had a contractual right to redundancy; and that the reference to the NES in the redundancy clause of his Employment Agreement was only intended as a reference to the calculation matrix for determining redundancy. At the hearing he had little more to add but did advise the Tribunal he was unaware that, by agreeing to stay on and assist the Administrators to find a buyer for the business, he was putting his redundancy payment at risk. He advised the Tribunal no one had ever brought this unintended consequence to his attention.
ISSUES IN CONTENTION
The issue for the Tribunal to determine is whether Mr. Fink was entitled to an advance payment of FEG in respect of his redundancy.
LEGISLATIVE FRAMEWORK
The Fair Entitlements Guarantee Act 2012 (the FEG Act) provides for the Commonwealth to make payments owed to employees if their employer becomes insolvent. The Commonwealth advances the entitlements to the employees and then seeks to recover the advances from the insolvent employer.
Section 3 of the FEG Act clearly outlines the objectives of the Act:
The main objects of this Act are:
(a) to provide for the Commonwealth to pay advances on account of unpaid employment entitlements of former employees of employers in cases where:
(i) the employers are insolvent or bankrupt; and
(ii) the end of the employment of the former employees was connected with that insolvency or bankruptcy; and
(iii) the former employees cannot get payment of the entitlements from other sources; and
(b) to allow the Commonwealth to recover the advances through the winding up or bankruptcy of the employers and from other payments the former employees receive for the entitlements.
Section 6 of the FEG Act identifies the kinds of employment entitlements which can be included as payment:
(1) This section defines the various kinds of employment entitlements of a person whose employment by an employer has ended, by reference to the person's entitlements under the governing instrument for the employment.
Annual leave entitlement
(2) The person's annual leave entitlement is the amount the person is entitled to under the governing instrument from the employer for paid annual leave that the person:
(a) had accrued at the end of the employment; and
(b) had not taken by then.
Long service leave entitlement
(3) The person's long service leave entitlement is the amount the person is entitled to under the governing instrument from the employer:
(a) for long service leave that the person had accrued at the end of the person's employment and had not taken by then; or
(b) on account of long service leave that, had the person's employment continued until the person qualified for long service leave, would have been attributable to the period before the actual end of the person's employment.
Payment in lieu of notice entitlement
(4) The person's payment in lieu of notice entitlement is the amount the person is entitled to under the governing instrument from the employer for a shortfall in the period of notice of termination of the employment.
Redundancy pay entitlement
(5) The person's redundancy pay entitlement is the amount of redundancy pay the person is entitled to under the governing instrument from the employer for termination of the employment.
Wages entitlement
(6) The person's wages entitlement is the amount of wages the person is entitled to under the governing instrument from the employer for work done, or paid leave taken, in the wages entitlement period.
Entitlement unaffected by payment
(7) The person's receipt of some or all of an amount he or she was entitled to under the governing instrument does not affect what is the person's annual leave entitlement, long service leave entitlement, payment in lieu of notice entitlement, redundancy pay entitlement or wages entitlement under this section.
Example:    If:
(a)    under the governing instrument, the person accrued 8 weeks of annual leave that had not been taken by the end of the person's employment; and
(b)    the employer paid the person for 3 of those weeks;
the person's annual leave entitlement is the entitlement to be paid for 8 weeks annual leave.
The wage entitlement period is defined in section 5 of the FEG Act:
"wages entitlement period" for a person whose employment by an employer has ended means the 13 weeks ending at the earlier of the following times (or either of those times if they are the same):
(a) the time the person's employment ended;
(b) the first time an insolvency practitioner has power (however expressed) to control or manage employment by:
(i) the employer; or
(ii) if the person was employed for a partnership by 2 or more partners--any of the partners who employed the person.
Section 119 of the FW Act outlines an employee’s entitlement to 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

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

Section 121 of the FW Act outlines the exclusions from obligation to pay redundancy pay:
(1) Section 119 does not apply to the termination of an employee's employment if, immediately before the time of the termination, or at the time when the person was given notice of the termination as described in subsection 117(1) (whichever happened first):
(a) the employee's period of continuous service with the employer is less than 12 months; or
(b) the employer is a small business employer.
(2) A modern award may include a term specifying other situations in which section 119 does not apply to the termination of an employee's employment.
(3) If a modern award that is in operation includes such a term (the award term), an enterprise agreement may:
(a) incorporate the award term by reference (and as in force from time to time) into the enterprise agreement; and
(b) provide that the incorporated term covers some or all of the employees who are also covered by the award term.
Section 23 of the FW Act provides the Meaning of small business employer:
(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.
(2) For the purpose of calculating the number of employees employed by the employer at a particular time:
(a) subject to paragraph (b), all employees employed by the employer at that time are to be counted; and
(b) a casual employee is not to be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis.
(3) For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.
(4) To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee's employment, the employees that are to be counted include (subject to paragraph (2)(b)):
(a) the employee who is being dismissed or whose employment is being terminated; and
(b) any other employee of the employer who is also being dismissed or whose employment is also being terminated.
CONTENTIONS
Applicant’s Submissions
Mr Hibbard argued at the outset that Mr Fink had missed receiving a redundancy payment of over $20,000; an outcome he described as unfair, absurd, contrary to the intention of the parties to Mr Fink’s Employment Agreement, and one not contemplated by the drafters of the FEG legislation.
Mr Hibbard submitted that this unfair and absurd situation resulted from the delegate’s decision of 16 May 2019, under s 38 of the FEG Act, to refuse to pay Mr Fink redundancy pay. This, Mr Hibbard submitted, followed decisions to grant redundancy payments to employees of the same employer who had been made redundant a few weeks earlier. He argued the only difference between the two determinations was that the other employees were made redundant at the time the employer went into administration, whilst the administrators had retained Mr Fink for four weeks. He submitted the delegate had found that, because by the time Mr Fink left the number of employees had dropped below 15, the “Small Business Exception” under s 121 of the Fair Work Act 2009 (Cth) (FW Act) applied to prevent him from receiving a redundancy payment.
Mr Hibbard submitted that under the FEG Act, where a company is in liquidation, the Commonwealth is required to make an “advance” to an employee, based on any entitlement they have under the relevant “governing instrument”. Mr Hibbard contended that the governing instrument in this case was Mr Fink’s Employment Agreement and, to the extent applicable, the National Employment Standards (NES) contained in Divisions 3 to 12 of Chapter 2 of the FW Act.
Mr Hibbard contended that Mr Fink’s was entitled to an advance of redundancy and relied on two key contentions:
(a) That his Employment Agreement excluded the Small Business Exception; it entitled Mr Fink to redundancy pay; and that Clause 9.10 of his Employment Agreement is ambiguously worded, and that ambiguity should be resolved in favour of Mr Fink, in accordance with ordinary principles of contractual construction.
(b) That the FEG Act and the Corporations Act 2001 (Cth) (CA) deem Mr Fink’s employment to have been terminated on the date that the Administrators were appointed; and as such his employment is deemed to have been terminated at the same time as the other employees; and therefore they are all entitled to redundancy payments.
c) That the Attorney General’s position is inconsistent with basic principles of insolvency law and creates absurd outcomes.
Employment Agreement excluded the Small Business Exception
Mr Hibbard argued that Mr Fink’s Employment Agreement excluded the Small Business Exception, noting that Clause 9.10 of Mr Fink’s Employment Agreement provides:
If you have completed 12 months’ continuous service, on termination of your employment in circumstances of genuine redundancy you will be entitled to redundancy pay in accordance with the National Employment Standards.
McGrath Nicol, in Mr Fink’s original Statement of Facts, Issues and Contentions to the Tribunal, contended that Mr Fink’s Employment Agreement provided him with a contractual right of entitlement on the basis that:
(a)Clause 9.10 of this contract refers to him being entitled to redundancy in the event his employment is terminated on these grounds;
(b)both Unlockd Operations' former Human Resources Manager and its former CEO confirmed that it was the intention of the employer that by including this provision, Unlockd Operations' staff would be contractually entitled to redundancy; and they also stated that to interpret this clause to import the entire NES (and therefore small business employer exemption) rendered the inclusion of this clause of the contract without any operative purpose; and
(c)if the contract is read down in the manner suggested by the Department then the clause has no operative effect. All that it is conferring are rights that already exist at law. This is contrary to the fact that the employment contracts issued by the employer evolved over time to expressly include a statutory right to redundancy as existed in Mr Fink's contract.
Mr Hibbard argued that clause 9.10 of Mr Fink’s Employment Agreement was ambiguous:
(i) on its face, given the use of the word “entitled” and the general reference to the NES; and
(ii) because the surrounding circumstances show it is ambiguous.
Mr Hibbard argued that in order to determine whether a contract is ambiguous, it is necessary to look at the words themselves and the surrounding circumstances. He noted that all words in a contract have work to do. The question for the Tribunal, he submitted, was what work the references to “entitled” and “National Employment Standards” do in clause 9.10. Mr Hibbard contended there are two possible interpretations:
(a) Mr Fink is entitled to a redundancy payment, the precise amount of which will be calculated under the relevant parts of the NES. This interpretation is favoured by Mr Fink as the correct interpretation, as it makes more sense within the text of the contract and is more consistent with the context in which the Employment Agreement was made; and
(b) Mr Fink is entitled to a redundancy payment, but if and only if the NES allows him to have a redundancy payment. This second interpretation is favoured by the Respondent.
Mr Hibbard argued that the key ambiguity in Mr Fink’s Employment Agreement was the reference to the NES, contending that the NES would apply to Mr Fink’s contract anyway, and numerous other clauses in the contract do not refer to them. Mr Hibbard argued the Respondent had offered no explanation for this strange “double up”. He contended therefore the question for the Tribunal is “why does clause 9.10 refer to the National Employment Standards?” And that the question is unavoidably ambiguous; and that finally the Tribunal’s task was to determine, objectively, what the reference to the NES is doing.
Mr Hibbard further argued that the second major indicator that clause 9.10 of Mr Fink’s Employment Agreement was ambiguous came from comparing it to the contract that the Employment Agreement replaced, which was dated 30 November 2015, in the early days of Unlockd and which contained no redundancy provision.
Mr Hibbard argued the second contract expanded Mr Fink’s entitlements in his contract as the company started to generate revenue and Mr Fink was promoted, noting:
(a) Mr Fink had been promoted from “Product Manager” to “Senior Product Manager”;
(b) Mr Fink’s annual salary had increased from $135,000 (plus superannuation) to $160,000 (plus superannuation);
(c) Mr Fink’s leave entitlement had changed from the entitlement under the relevant award to an unlimited leave, in accordance with a policy apparently adopted by the company; and
(d) the original contract was otherwise silent on conditions.
Mr Hibbard argued the third ambiguity was obvious, as the company and the Administrators were operating on the assumption that Mr Fink was entitled to redundancy payments, relying upon:
(a)the statements of Mr Fink and Ms Martino, and oral evidence given by Mr Fink at the hearing, of their common understanding that only the calculation matrix contained in s 119(2) of the FW Act was incorporated in the Employment Agreement; and
(b)the letter that the Administrators sent to Mr Fink on 24 July 2018 confirming Mr Fink’s entitlement to redundancy pay.
Mr Hibbard contended that in light of the unnecessary reference to the NES, the use of the word “entitled”, the fact that Mr Fink, the company and the Administrators all considered, and acted on the assumption that Mr Fink was entitled to redundancy payments under clause 9.10, the correct meaning of the clause must be ambiguous. Mr Hibbard argued that where the meaning of a clause is ambiguous, it is necessary to determine which meaning the clause should have by reference to ordinary canons of construction.
Mr Hibbard argued that the key principle of contractual interpretation was that it was often necessary to look to the surrounding circumstances in order to determine whether a term is, in fact, ambiguous. In that context, he argued, it was open and appropriate for the Tribunal to look at the surrounding circumstances to determine the meaning of clause 9.10 of the Employment Agreement. To emphasis this point, Mr Hibbard took the Tribunal to the matter of Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd[1], where the High Court relevantly said at [40]:
What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.
And in Electricity Generation Corporation v Woodside Energy Ltd[2], French CJ, Hayne, Crennan and Kiefel JJ explained:
The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating".
[1] (2004) 219 CLR 165.
[2] (2014) 251 CLR 640.
Mr Hibbard argued that once the Tribunal came to the correct and preferable decision that clause 9.10 of Mr Fink’s Employment Agreement was ambiguous, the Tribunal must then determine the correct construction. Mr Hibbard contended the correct construction was that Mr Fink remains entitled to redundancy payments, arguing it is clear from the surrounding context of his Employment Agreement and that it is the less absurd result.
Mr Hibbard contended that where a clause in a contract is “ambiguous or susceptible of more than one meaning”, the Tribunal may look at the surrounding circumstances to resolve the ambiguity. The principles for doing so he argued were recently explained in Federal Commissioner of Taxation v The Trustee for the Michael Hayes Family Trust.[3] Steward J (with whom Griffiths and Derrington JJ agreed) endorsed the following statement of principle:
There is now a deal of authority for the proposition that whether there is in truth a constructional choice available to a written contract cannot be determined without first at least considering evidence of surrounding circumstances.
[3] (2019) 273 FCR 567
Mr Hibbard argued that the Tribunal’s task was not to exercise a discretion, but rather, to decide on the correct interpretation of the contract in light of these principles.
Mr Hibbard contended that all of the surrounding circumstances he had outlined not only supported the existence of ambiguity, but that they supported that ambiguity being resolved in Mr Fink’s favour; fundamentally, that Mr Fink was entitled to a redundancy payment, the precise amount of which would be calculated under the relevant parts of the NES.

Mr Hibbard further contended that an interpretation that Mr Fink was entitled to a redundancy payment was also the better one because it was less absurd. He went on to argue that where language is open to two constructions in a contract, the preferable construction is the one “which will avoid consequences which appear capricious, unreasonable, inconvenient or unjust even though the construction adopted is not the most obvious, or the most grammatically accurate”.[4]
[4] Applicant’s Supplementary Submissions at [20].
In summary, Mr Hibbard contended that the interpretation of Mr Fink’s Employment Agreement in favour of him being entitled to redundancy was plainly preferable, as:
(a)it is the only construction that gives any objective explanation for including the reference to the NES;
(b) it accords better with the parties’ stated intentions;
(c)it avoids the unjust outcome of Mr Fink losing his redundancy entitlement simply by the arbitrary application of the Small Business Exception in circumstances beyond his control; and
(d)it avoids the absurdity that, following an insolvency event (which otherwise is not relevantly addressed in the Employment Agreement), an employee who has kept working with all the stress and uncertainty of a voluntary administration process going on around him, is further punished by losing his entitlements. Mr Hibbard contended this absurdity is particularly acute in Mr Fink’s case, given that Mr Fink stayed on to assist the voluntary Administrators to try to achieve a “going concern” outcome, which would have preserved his employment.
Basic principles of insolvency law
Mr Hibbard then went on to contend that whether Mr Fink succeeds in his first argument, the Respondent had a more fundamental problem, as they had misinterpreted the FEG Act because:
(a)their interpretation is contrary to longstanding insolvency law, which the Parliament must be assumed to have intended continued to apply; and
(b) it is unfair and leads to absurd outcomes.
Mr Hibbard argued that even if clause 9.10 of Mr Fink’s Employment Agreement did import the Small Business Exception, the correct construction of the relevant legislation prevents the Small Business Exception from applying in the present case. He argued that under a correct construction of the FEG Act:
(a)s 558 of the CA, which is binding on liquidators, should bind the Respondent in determining the time at which notice of termination is deemed to have been given to employees and in determining the exercise of ss 28 and 29 of the FEG Act;
(b)s 558 must be interpreted in light of two longstanding principles of insolvency law, being:
(i)the importance of the “relevant date”; and
(ii)the pari passu principle, which requires that employees be treated equally.
Mr Hibbard contended that the FEG Act must be read in light of its context and purpose, which is to protect employees’ entitlements following an employer becoming insolvent. He contended that the machinery of FEG was part of a broader regime and cannot be understood without looking to the CA. He argued that the FEG Act has no operation other than in an insolvency context. Its stated objects are:
to provide for the Commonwealth to pay advances on account of unpaid employment entitlements of former employees of employers in cases where:
(i) the employers are insolvent or bankrupt; and
(ii)the end of the employment of the former employees was connected with that insolvency or bankruptcy; and
(iii)the former employees cannot get payment of the entitlements from other sources…
Mr Hibbard contended that the FEG Act’s context was part of a suite of legislation that governs insolvency in Australia and is the successor to a long line of government schemes to protect the employees of insolvent employers. He therefore argued that given this context, two fundamental principles of insolvency law must be borne in mind when construing the FEG Act: the primacy of the “relevant date”/ “insolvency event”, and the pari passu principle.
“relevant date”/ “insolvency event”
Mr Hibbard contended the importance of the insolvency event was apparent in the objects of the FEG Act, which explains its purpose is to provide for employees whose employment is “connected with [an employer’s] insolvency”.
Mr Hibbard argued that in any winding up, the liquidation and distribution of assets notionally takes place on the date of the winding up order (or other “relevant date”), the date effectively freezing the position of the company in time. He referred the Tribunal to the matter of Grapecorp Management Pty Ltd (in liq) v Grape Exchange Management Euston Pty Ltd[5], where the Supreme Court described this as “a fundamental principle of insolvency law”. The CA defines the “relevant date”, in relation to a winding up, as the day on which the winding up is taken, because of Division 1A of Part 5.6, to have begun. This is generally the date on which the relevant external administration process began.
[5] (2012) 265 FLR 33.
Mr Hibbard further argued the “relevant date” concept permeates the CA, as it:
(a) determines the assets and liabilities of the company in the winding up;
(b)determines the time period within which the liquidator can recover property or compensation for the benefit of creditors; and
(c) is otherwise generally used as a key reference point or “deeming provision”.
Mr Hibbard referred the Tribunal to s 558 of the CA, describing it as a provision that is designed to protect employees who continue to be employed by a company after the appointment of a liquidator. Crucially, s 558(1) provides that:
where a contract of employment with a company being wound up was subsisting immediately before the relevant date, the employee under the contract is … entitled to payment under section 556 as if his or her services with the company had been terminated by the company on the relevant date.
Mr Hibbard argued this meant that:
(a) it does not matter when or if an employment contract is in fact terminated; and
(b)if the company ends up in liquidation an employment contract is deemed to have been terminated at the relevant date. The relevant date here, he argued, was the date of the appointment of the Administrators as 12 June 2018.
Mr Hibbard further argued, in light of the effect of s 558(1) of the CA deeming an employee to be terminated at the relevant date, s 558(2) of the CA deems an employee who continues to be employed by the liquidator as an employee of the company. He argued the only explanation for this sub-section is that s 558(1) of the CA is intended to have substantive effect. Mr Hibbard asked, rhetorically, why else would it be necessary to establish a further deeming provision that simply restates what the Respondent argues would otherwise be the status quo?[6]
[6] Applicant’s Supplementary Submissions at [34].
Still further, Mr Hibbard argued any “retrenchment amount” that is payable after the relevant date becomes a cost of the winding up under s 558(3) of the CA. In s558(5) of the CA the retrenchment amount, in relation to employment of a person, means an amount payable to the person, by virtue of an industrial instrument, in respect of termination of the employment. From the outset Mr Fink has contended he had missed out on a redundancy payment of over $20,000.
He argued that the legislature has considered it necessary to include this deeming provision apparently on the assumption that an employee’s employment would otherwise be terminated by reason of s 558(1) of the CA. The effect of being a “cost of the winding up” is that such an entitlement takes first priority in the winding up under s 556(1)(a) of the CA. Mr Hibbard therefore contended that if such an entitlement were to be paid by the Commonwealth as an advance under the FEG Act, and the Commonwealth took on priority under s 560(c) of the CA , then the Commonwealth would be the first to pursue its priority entitlement to those funds under s 556(1)(a) of the CA.
Pari passu principle
Mr Hibbard then contended that the second fundamental principle for dividing assets in any insolvency is the pari passu principle, describing it as a basic principle of fairness. He explained to the Tribunal that where there is insufficient money to pay the debts owed to a class of creditors, the available money will be divided between them on a pro rata basis. The principle has been adapted so that particular classes of creditors have priority over others but, within each class, the pari passu principle still applies. Farrell J explained in Re Killarnee Civil & Concrete Contractors Pty Ltd (in liq) that:
The preferred position accorded to employees over other unsecured creditors and some secured creditors under the Corporations Act and the introduction of the Fair Entitlements Guarantee Act reflect a long held position of legislatures in the United Kingdom and Australia that it works undue hardship on employees to fail to afford them some priority in the insolvency administration of companies.[7]
[7] (2018) 260 FCR 310 at 216.
Mr Hibbard argued “Employees” is a category of creditors to which the pari passu principle applies; contending it would be profoundly unfair in any insolvency if one employee were entitled to a higher return over another. And that this unfairness would be compounded in the case of an employee who, having been retained by administrators to assist with maximising the chances of the company’s continued existence, is exposed to the risks and uncertainty associated with staying on as an employee of an insolvent employer. Mr Hibbard argued that this was the fundamental unfairness of the present case.
Mr Hibbard contended the task for the Tribunal was to apply the fundamental principle of insolvency law as he had outlined to the FEG Act. He contended the relevant parts of the legislation were:
Section 28(1) of the FEG Act provides:
Payment to eligible person or intermediary
(1)On behalf of the Commonwealth, the Secretary must pay an advance a person is eligible for in relation to his or her employment by an employer:
(a)       to the person …
Section 29 provides:
Recovery of advance paid to liquidator
For the purposes of section 560 of the Corporations Act 2001, a payment of an advance for a person’s employment by an employer that is made to the liquidator of the employer under section 28 of this Act is to be treated as follows:
…
(c) so much of the advance as is for the person’s payment in lieu of notice entitlement or redundancy pay entitlement is taken to be an advance (within the meaning of that section) of money by the Commonwealth for the purpose of making a payment in respect of termination of employment.
Section 560 of the CA provides:
Advances for company to make priority payments in relation to employees
If:
(a)       a payment has been made by a company:
…
(iii)in respect of leave of absence, or termination of employment, under an industrial instrument; and
(b)the payment was made as a result of an advance of money by a person (whether before, on or after the relevant date) for the purpose of making the payment;
then:
(c)the person by whom the money was advanced has the same rights under this Chapter as a creditor of the company; and
(d)subject to paragraph (e), the person by whom the money was advanced has, in the winding up of the company, the same right of priority of payment in respect of the money so advanced and paid as the person who received the payment would have had if the payment had not been made …
Section 558(1) and (2) of the CA provides:
Debts due to employees
(1)    Where a contract of employment with a company being wound up was subsisting immediately before the relevant date, the employee under the contract is, whether or not he or she is a person referred to in subsection
(2) Where, for the purposes of the winding up of a company, a liquidator employs a person whose services with the company had been terminated by reason of the winding up, that person is, for the purpose of calculating any entitlement to payment for leave of absence, or any entitlement to a retrenchment amount in respect of employment, taken, while the liquidator employs him or her for those purposes, to be employed by the company.
Mr Hibbard argued that it was apparent, from the interlinked provisions above, that s 558 of the CA guides the interpretation of the FEG Act. He contended that in light of that chain of provisions, there are two ways of interpreting s 558 of the CA:
(a)first, that it is only mechanical, and it just applies to working out where a creditor fits in the s 556 of the CA priority; or
(b) second, it confers a substantive right on a creditor.
Mr Hibbard argued that the substantive right is the preferable interpretation, because:
(a)it is more consistent with the primacy of the “relevant date” – it looks at the date on which the administrators were appointed as having the significant effect described above. The alternative would be to treat the role of that date as incidental. The legislature clearly had the primacy of the relevant date, and the substantive effect of s 558(1) of the CA, in mind when it drafted the whole of s 558 of the CA and;
(b)it is more consistent with the pari passu principle – that employees should rank equally. The alternative would be that, even among those employees who are terminated for the same reason and as part of the same insolvency, some get paid redundancy payments and others do not. Mr Hibbard argued that this would be profoundly unfair.
Basically, Mr Hibbard asserted that the effect of the interpretation as he argued would be that Mr Fink’s termination occurred on 12 June 2018. At this “time immediately before the termination” the company employed more than 15 employees, as required by s 121 of the FW Act and was not a “small business employer” at that time; and therefore, Mr Fink was entitled to redundancy pay.
Mr Hibbard argued that the legislature cannot have intended that the FEG Act and the CA operate together in the way that the Respondent says that they do; arguing if so, it is bizarre and unfair.
Mr Hibbard contended first it is unfair to employees in the situation of Mr Fink. It is absurd that two employees could lose their jobs for the same reason – their employer has become insolvent – but one gets redundancy payments and the second employee does not, simply because the second employee was not terminated immediately. Mr Hibbard in his final written submission to the Tribunal argued the Respondent’s: preferred construction not only contemplates but encourages the following situation. A company has 30 employees. An administrator is appointed on Monday. 15 employees are terminated on Tuesday. One employee resigns on Thursday. The remaining employees are terminated the following week. Simply because of that one employee resigning, the remaining 14 do not get redundancy payments. If that employee had not resigned, there would be 15 employees, and the threshold for being a “small business employer” would not be met.[8]
[8] Applicant’s Supplementary Submissions at 49.
Mr Hibbard argued that where an employee is terminated early with a redundancy payment, and a second employee terminated later without a redundancy payment, it is no answer to this absurdity to say that the second employee got a few weeks’ more income than the first employee. This ignores the purpose of a redundancy payment, which is to compensate an employee for the loss of their position while they seek a new one. The second employee is equally as disadvantaged by his or her termination as the first employee. In many circumstances, the second employee may in fact be more disadvantaged, because they would be entering a job market where they may be competing with the first employee.
Mr Hibbard argued his preferred interpretation was also the correct interpretation because it was more consistent with the canon of construction to avoid irrational and absurd outcomes. He noted the High Court explained in Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation:
…(w)hen a judge labels the operation of the statute as “absurd”, “extraordinary”, “capricious”, “irrational” or “obscure” he [or she] assigns a ground for concluding that the legislature could not have intended such an operation and that an alternative interpretation must be preferred. But the propriety of departing from the literal interpretation is not confined to situations described by these labels. It extends to any situation in which for good reason the operation of the statute on a literal reading does not conform to the legislative intent as ascertained from the provisions of the statute, including the policy which may be discerned from those provisions.[9]
[9] (1981) 147 CLR 297 at 321.
Mr Hibbard argued the practical effect of this influential passage is that where different interpretations are available, a Court or Tribunal should use the interpretation that is not absurd or unfair. He contended that, as with construing a contract, this is not a question of discretion. He argued the Tribunal’s task was to ask what the correct interpretation is, and the Tribunal must be guided by this principle in reaching its conclusion.
Fundamentally, Mr Hibbard argued the Respondent’s interpretation of the FEG Act has absurd outcomes for particular employees in Mr Fink’s position, and for the conduct of voluntary administrations more generally. He felt it should not stand, arguing it creates broader problems, notably:
(a)a voluntary administration is an extremely fast-paced and stressful environment. Administrators have a statutory obligation to take control of a company, rapidly understand its business, make life-changing decisions about that business and determine the company’s future direction. They are given sweeping powers to do so. An administrator put in charge of a company with, say 20 employees, has to walk a tightrope – often with extremely limited funds – about how many employees the company has and the profound effect the Small Business Exception has on the business. It will often simply not be feasible to retain more than 15 employees with the funds available;
(b)the legislation may also create a conflict, if not a perverse incentive, for a voluntary administrator. The voluntary administrator of a company with 20 employees is presented with the ability to terminate 6 of them and release a significant amount of money that would then be available to other creditors in any liquidation; and
(c)it undermines the broader purpose of the administration. Key to a voluntary administrator exercising his or her duties is to examine whether a path is available to take a company out of insolvency. Often this will require reducing the number of employees to a small, streamlined team. This necessarily involves an element of risk on the part of employees. It would significantly undermine the administrator’s position to say to employees in this position “please stay with the company, take on the risk of an unsuccessful turnaround and the payoff is you don’t even get redundancy payments if your position is made redundant”.[10]
[10] Applicant’s Supplementary Submissions at [51] (c)
Respondent’s Submissions
Ms Sweet contended that the task of the Tribunal was to decide if the Respondent’s decision was the correct or preferable one, namely, that Mr Fink was not entitled to an advance on account of redundancy pay under the FEG as Unlockd Operations Pty Ltd was a small business employer at the relevant date of his termination.
Ms Sweet contended the Tribunal should find the Respondent had made the correct decision, for the following reasons:
(a) under the FEG Act, Mr Fink’s entitlement to the advance is tied to the amount of redundancy pay to which he was entitled under the relevant governing instrument;
(b) in this instance, the governing instrument was, or incorporated, the FW, which expressly excludes employees of a “small business employer” from an entitlement to redundancy pay, even where the employment is terminated due to the insolvency of the employer. Ms Sweet argued it was not in dispute that Mr Fink’s employer employed 14 employees at the date of his termination;
(c) the CA is not a “governing instrument” for employment, and its provisions are thus irrelevant when assessing entitlement to an advance under the FEG Act. Entitlement must be shown under the governing instrument, which is the FW Act in this case; or, alternatively, the contract of employment, incorporating the NES including s121 of the FW Act;
(d) further insolvency law principles, such as the ‘pari passu’ principle, are equally inapplicable when assessing entitlement to a FEG advance. Under the FW Act, entitlement to redundancy pay may differ between employees of the same employer depending on, amongst other things, the date of termination and the precise number of employees employed at the particular time. Concepts such as pari passu are not part of the terms of the FW Act as the governing instrument. Ms Sweet contended it is the task of the Tribunal to determine entitlement according to the governing instrument, not Corporations Law.

Ms Sweet argued one of the main objects of the FEG Act was to provide for the Commonwealth to pay advances on account of unpaid employment entitlements of former employees of insolvent employers. However, she argued employees must be eligible for an advance and are only entitled to an advance in respect of the employment entitlement as defined.
Ms Sweet contended that under s 10 of the FEG Act, a person is eligible for an ‘advance’ if the Respondent is satisfied, amongst other things, that: ‘the person is owed one or more debts wholly or partly attributable to all or part of one or more employment entitlements’, Ms Sweet pointed out in her final submission to the Tribunal that s 5 of the FEG Act contains the following relevant definitions:
‘Employment entitlement’ is defined as, amongst other things, ‘redundancy pay entitlement’.
‘Redundancy pay entitlement’ is defined as the amount of redundancy pay the person is entitled to under the governing instrument from the employer for termination.
and crucially,
“Governing instrument for employment means any of the following that governs the employment:
(a)       a written law of the Commonwealth, a State or a Territory;
(b)       an award, determination or order that is made or recorded in writing;
(c)       a written instrument;
(d)       an agreement (whether a contract or not).”[11]
[11] Respondent’s Closing Submissions at [7] to [8].
Ms Sweet therefore contended that Mr Fink’s entitlement to financial assistance under the FEG Act in respect of redundancy pay was to be determined by reference to any debt owed to him attributable to the amount of redundancy pay to which he was entitled (if any) under the governing instrument for employment.
Ms Sweet strongly contended that the CA was not a ‘governing instrument’ for employment that governed the employment of Mr Fink. She supported this contention by indicating the Applicant had conceded this point in his supplementary submissions.
Ms Sweet strongly contended that the FEG Act does not attempt to incorporate all insolvency law concepts and does not specifically incorporate a liquidator’s duties in terms of deeming provisions regarding priority payments for employees from the CA. Rather, Ms Sweet argued that the FEG Act only provides for employment entitlements that are covered under an employee’s employment instruments.
Ms Sweet contended that to determine what, if any, redundancy pay entitlement Mr Fink had under his governing instrument, it is necessary to examine his Employment Agreement , as this was the governing instrument for the purposes of Mr Fink’s application for an advancement under the FEG Act.
Therefore, Ms Sweet contended that the Tribunal must determine:
(a)whether the governing instrument is the FW Act or the Employment Agreement; and
(b)if it is the latter, whether the contract incorporated the exclusion from a redundancy pay entitlement in s 121(1)(b) of the FW Act.
Ms Sweet noted Mr Fink’s Employment Agreement provided as follows:
9.10 Statutory termination entitlements
If you have completed 12 months’ continuous service, on termination of your employment in circumstances of genuine redundancy you will be entitled to redundancy pay in accordance with the National Employment Standards.
Ms Sweet argued that the clause had a plain meaning and was not a promissory term. She said that the clause simply alerts the employee that there is a statutory source of rights in respect of redundancy pay on termination, namely the NES (which forms part of the FW Act).
Ms Sweet argued that this interpretation of the clause was consistent with the heading employed by the parties, namely “Statutory termination entitlements”. It is also consistent with the parties’ use of the term “in accordance with”. The Collins English Dictionary defines the phrase “in accordance with” as follows:
“if something is done in accordance with a particular rule or system, it is done in the way that the rule or system says that it should be done.”
Ms Sweet took the Tribunal to other parts of Mr Fink’s Employment Agreement where the parties made another non-promissory, informational reference to another statutory entitlement, using the “in accordance with” language:
7.4 Long service leave
You will be entitled to long service leave in accordance with applicable legislation.
Additionally, Ms Sweet observed that where statutory annual leave and personal leave rights were to be exceeded, they were made the subject of a company policy and the parties expressly noted in the contract that the policy did not form part of the terms of the contract.
Ms Sweet therefore argued that, the terms of clause 9.10 of Mr Fink’s Employment Agreement, and the various wider textual indicators from the contract as a whole, demonstrate that clause 9.10 has a plain meaning; namely to notify the employee that redundancy entitlements are governed by minimum conditions set out in the relevant statute.
Ms Sweet contended that in the alternative, if the clause grants a contractual right to redundancy pay, the entitlement incorporates the whole of the NES as it relates to redundancy pay entitlements, including the exclusion in s 121(1)(b). The parties have used the broadest possible language – “National Employment Standards” - to refer to the entitlement. In the context of the contract as a whole, there is no warrant to read these words down to refer to a specific sub-section dealing only with the amount of redundancy pay.
Fundamentally, Ms Sweet argued, it therefore follows that the governing instrument for the purposes of Mr Fink’s FEG Act application is:
(a) the FW Act; or, in the alternative,
(b) the Employment Agreement, incorporating the NES, including s 121 of the FW Act.
Ms Sweet argued that no ambiguity existed in the language of clause 9.10 of Mr Fink’s Employment Agreement. He contended there was no need to look beyond the words of the agreement as, pursuant to the “true rule” in Codelfa Construction Pty Ltd v State Rail Authority of NSW[12] (Codelfa), it is essential to identify ambiguity in the language of the contract before regard may be had to the surrounding circumstances.
[12] (1982) 149 CLR 337.
Ms Sweet contended that consistent with the line of High Court authority which includes the decisions in Codelfa, the task of the Tribunal was to interpret clause 9.10 of Mr Fink’s Employment Agreement objectively, by reference to the language actually used by the parties in that document and not their subjective intentions. She argued that evidence of a party's actual intentions is relevant only in limited circumstances, none of which apply in this case; and as such the evidence of Mr Fink and Ms Martino, about what Unlockd intended or believed the reference in clause 9.10 to the NES to mean, is irrelevant.
Furthermore, Ms Sweet contended that even if ambiguity existed within the clause, the material sought to be relied upon by Mr Fink as evidence of the surrounding circumstances:
(a)is inadmissible, because it (at best) reveals the subjective as opposed to objective understandings of the parties, as Ms Martino’s statement only gave evidence of the subjective intention of management in respect of the redundancy entitlement in the contractual agreements of employees. At no stage did Ms Martino give evidence that management’s intentions were conveyed to Mr Fink or staff generally. Thus, it could not be considered evidence of the objective intentions of the parties; or
(b) is irrelevant or lacking in probative value.
Ms Sweet argued Mr Fink’s evidence, at its highest, went no further than stating what he subjectively understood of clause 9.10 of his Employment Agreement. She contended it was not evidence that goes to establishing the objective intentions of the parties at the time that the contract was entered into; and it provides no evidence of mutually known facts. Ms Sweet argued that Mr Fink’s assertion that the reference to the NES was only meant to be a reference to s 119(2) could not be relied upon as he did not say why he believed this to be so and his assertions that this is “confirmed by former head of Human Resources of Unlockd Operations’, was not borne out by the evidence before the Tribunal. Further, she argued that Mr Fink had not provided evidence of what management’s intention was, say that he was aware of such an intention at the time of entering into the contract, nor how he knows of this subjective intention of management. Ms Sweet contended that Mr Fink’s evidence in respect of his Employment Agreement was just hearsay evidence of management’s purported subjective intention from an unknown source, obtained at an unknown time.
Ms Sweet argued little weight should be placed on the evidence of Ms Martino, as it was problematic. Ms Sweet argued that despite her senior position, Ms Martino refers to being “aware” of management’s intention and of “understanding” that it was management’s intention to include eligibility to redundancy payment, as if she was not part of this management. Therefore, one can only assume that she was not part of the management team that made these decisions. Further, and critically, Ms Sweet contended Ms Martino only provided evidence of the subjective intention of management in respect of the redundancy entitlement in the contractual agreements of employees; and at no stage did she give evidence that management’s intentions were conveyed to Mr Fink or other Unlockd employees. Thus, Ms Sweet contended there was no evidence of the objective intentions of the parties.
Ms Sweet argued that the fact that Mr Fink’s former contract of employment was silent on redundancy entitlements, and the new contract included a provision in relation to an entitlement to redundancy pay, provided nothing compelling by way of argument to advance the case he had a right to a redundancy payment under FEG. Ms Sweet asserted there was nothing in the argument that if there was no intention to provide a contractual right to redundancy, the contract would have been silent about it, as she contended contracts regularly refer to matters which are not promissory but rather informational in nature.
Ms Sweet contended accordingly, that a reasonable person would conclude that when considered objectively in the context of the contract as a whole, the purpose of clause 9.10 of Mr Fink’s Employment Agreement was to confirm the existence of a statutory entitlement to redundancy pay rather than to create an entitlement which was not subject to the conditions of the NES.
Ms Sweet argued that the letter sent from the Administrators, in which they express an opinion as to Ms Fink’s entitlement to redundancy pay, was not evidence of ambiguity within the contract. Ms Sweet argued that ambiguity within the contract could only be determined from the contract, its text, context and admissible surrounding circumstances. The post-contractual expression of an opinion by payroll staff and voluntary Administrators was not evidence of ambiguity. Further, and in any event, it is not even clear on the face of the document whether the terms of the contract have been reviewed by those individuals when expressing a view as to Mr Fink’s purported entitlements under the FEG Act.
Ms Sweet contended that Mr Fink had no entitlement to redundancy pay because he was employed by a small business employer at the time of his termination; and s 121 of the FW Act provides that the entitlement to redundancy pay in s 119 does not apply to an employee’s termination if, immediately before the time of termination, or at the time when the person was given notice of the termination, the employer is a small business employer. Under s 23, an employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.
Ms Sweet argued that it is not disputed that, immediately before the time Mr Fink’s employment was terminated without prior written notice on 20 July 2018, his employer employed 14 employees. As a result, the exclusion in s 121 applies, and Mr Fink had no entitlement to redundancy pay under the relevant governing instrument. The FW Act contemplates that this exclusion will operate even where the termination of employment is due to the insolvency of the employer. Ms Sweet argued it follows that Mr Fink was not entitled to an advance under the FEG Act with respect to redundancy pay because his redundancy pay entitlement pursuant to s 6(5) of the FEG Act was nil. Ms Sweet contended that this outcome was consistent with earlier decisions of this Tribunal citing Yeo v Secretary, Attorney-General’s Department [2020] AATA 117; Scaturro and Secretary, Attorney-General's Department [2020] AATA 653; Bower and Secretary, Attorney-General's Department [2020] AATA 4353
In the Respondent’s Statement of Facts, Issues and Contentions it took the Tribunal to former Tribunal decisions which had also determined an individual is not entitled to a FEG payment for redundancy if, immediately before the time of the termination, or at the time when the person was given notice of the termination as described in section 117(1) (whichever happened first), the employer is a small business employer.
The Respondent contended that in Mi and Secretary, Department of Employment[13] (Mi), the Tribunal considered whether two entities could be regarded as associated entities so that the employees of both companies would count toward the 15-employee small business employer threshold. The Respondent contended the Tribunal's reasons in Mi included the following discussion of the meaning of the expression “immediately before the time of the termination”, which was adopted by the Tribunal:
What exactly is meant by 'immediately before the time of the termination' and 'the time when the Applicant was given the notice' requires some statutory interpretation.[14]
… Secondly, the expression 'at the time when the person was given notice', on its plain words, clearly indicates a specified point in time at which the notice of termination is given.
The Applicant puts her argument on this point differently. She says by way of “Final Submission” that:
We note the small business employer test under the Fair Work Act is to be under taken immediately before the time of the termination (or notice of the termination if this happened first). For this reason, the time for determining whether a company is a small business employer was the time immediately before the appointment of the Administrator on 27 September 2013.
With some regret, I conclude that it is not open to me sitting as the decision-maker in this case to insert a different test in s 121(1) for determining the time at which an employer was a small business employer. For example, it is not open to me to insert a longer or different date, such as immediately before the time at which the employer company is placed into administration/liquidation. Sitting as the Tribunal, I am required to apply the unambiguous language chosen by Parliament and that language drives the conclusion that the relevant date to consider in this case is 4 October 2013 being both the date of the Applicant's termination of employment and the date of the notification to her of that termination. I am clearly not at liberty to look to an earlier date such as the date immediately prior to the commencement of the administration.[15]
Thus, the critical conclusion is that the case turns on whether Auto Tuft was a small business employer on 4 October 2013.
[13] [2016] AATA 419.
[14] [2016] AATA 419 at 14.
[15] [2016] AATA 419 at 23.
The Respondent contended that the Tribunal found that on 4 October 2013, Ms Mi's former employer was a small business employer because it employed only five employees on that date. Accordingly, the Tribunal concluded that Ms Mi did not have an entitlement to redundancy pay under section 119 of the FW Act; and therefore, was not entitled to an advance on account of redundancy pay under the FEG Act.
The Respondent contended that in Gayed and Secretary, Department of Jobs and Small Business[16], Mr Gayed's employment with his former employer was terminated without notice on 11 October 2016. Before the Tribunal, Mr Gayed maintained that his last day with his former employer should be taken as 25 September 2016, when the majority of staff were terminated, and not 11 October 2016. The Tribunal found that his employment was terminated by his former employer on 11 October 2016, and that his former employer was a small business employer at that time as it employed five employees. The Tribunal determined that he was therefore not entitled to redundancy pay under the FW Act, and was not entitled to an advance on account of redundancy pay under the FEG Act.
[16] [2019] AATA 1132.
The Respondent contended that in Kable and Secretary, Attorney-General's Department[17] (Kable), Mrs Kable's employment had been terminated without notice on 10 August 2017. Mrs Kable contended that the Tribunal should assess whether her former employer was a small business employer as at 7 July 2017, when the company became unable to continue paying wages. The Tribunal's reasons include the following discussion of the meaning of the expression “immediately before the time of the termination” which was adopted by the Tribunal:
The applicant feels that this outcome is unfair and that she is being penalised for her loyalty and empathy which led her to stay on longer than other employees. The applicant contends the date that should be taken into account, for the purposes of determining her FEG entitlements, is 7 July 2017. Unfortunately, the Tribunal has no discretion in this situation. The applicant continued to perform duties until her employment ended on 10 August 2017. Her other FEG entitlements have been calculated to reflect this reality. There is no scope for the Tribunal to determine that a date should be used to calculate benefits which is different from the actual date of the applicant's termination. Consequently, the decision under review must be affirmed.[18]
[17] [2019] AATA 3963.
[18] [2019] AATA 3963 at 37.
The Respondent contended that, as the Tribunal stated in Mi and Kable, the Tribunal has no discretion to look to a date earlier than 20 July 2018. Further, there is no scope for the Tribunal to determine that a date should be used to calculate benefits which is different from the actual date of Mr Fink’s termination. Accordingly, the Tribunal must confine itself to an assessment of whether Unlockd Operations was a small business employer on 20 July 2018. The Respondent contended all of the available evidence supports a finding that the company was a small business employer at that time. As such, s 121 of the FW Act operates to exclude the application of s 119 of that Act to the termination of the Applicant's employment, and he is not entitled to an advance on account of redundancy pay under the FEG Act.
Ms Sweet contended that Mr Fink’s argument that the decision not to grant him a redundancy pay under FEG was “absurd” and “unfair”, was ill-founded. She argued that in truth, the decision simply reflects a correct application of the FEG Act’s provisions for the calculation of the amount of the advance to which he is entitled.
Ms Sweet argued Mr Fink’s representatives’ contentions that the drafters of the legislation could not have contemplated an outcome where individuals such as Mr Fink would “miss” out on redundancy payments was plainly incorrect. She argued that the FEG Act expressly links entitlement to an advance to an entitlement under a governing instrument, that the FW Act is the minimum standard for redundancy pay for national system employees, and thus it will often be the relevant governing instrument for the purposes of an FEG Act advance.
Ms Sweet argued the FW Act expressly provides that an employee made redundant due to insolvency is not entitled to redundancy pay if, immediately before the termination, or at the time when the person was given written notice of the day of the termination (whichever is earlier), the employer had fewer than 15 employees. She contended the FEG Act was drafted in light of the FW Act; and that Mr Fink’s situation was one expressly provided for in the FW Act and thus well within the likely contemplation of the drafters of the FEG Act. Ms Sweet argued that Mr Fink’s ineligibility for an advance for redundancy was therefore hardly an “absurd” outcome in the circumstances.

Ms Sweet argued that Mr Fink’s fellow employees were made redundant on the appointment of Administrators, when the employer had 33 employees, and by contrast Mr Fink’s employment was sustained for an additional five weeks, for which he concedes that he was paid. Thus, she argued Mr Fink was made redundant at a later time, having had the benefit of continued employment comprising five weeks’ pay, when, by definition, Unlockd was a small business employer, under the FW Act. Ms Sweet argued that Mr Fink’s assertion that the decision is “unfair” because the “only difference” between him and his fellow employees was the time of termination is simply not correct, and although the outcome may feel unfair to Mr Fink, it did not mean the decision was incorrect. Fundamentally, the decision was correct as the number of employees employed at the time of the termination is critical under the redundancy provisions contained within his governing instrument.
Ms Sweet cautioned that appeals to generalised unfairness are a distraction and liable to lead the Tribunal into error.
Ms Sweet finally addressed Mr Fink’s argument in respect of the operation of s558 of the CA, noting that pursuant to Part 5.6 of the CA, liquidators are bound to disperse the funds available in a winding up of an insolvent company according to the statutory priority established within that Part. To facilitate the making of such priority payments, s 558 deems an employee’s services to have been terminated on the relevant date. She argued these sections are designed to determine the priority with which employees are paid compared to secured creditors, the insolvency practitioners and the general body of unsecured creditors; and are not determinative of employee entitlements.
Ms Sweet argued it was simply erroneous to suggest that s 558 of the CA should bind the Respondent (and by extension this Tribunal) in “determining the time at which notice of termination is deemed to have been given to employees and the exercise of ss 28 and 29 of the FEG Act”.[19] Ms Sweet argued that as the CA is not a governing instrument for employment, s 558 has no relevance to the determination of issues of entitlement to an advance on account of redundancy pay under the FEG Act. Further, the very scheme sought to be imposed by the Applicant – that termination of employment will be deemed to have occurred on a date prior to that on which notice of termination is given – is inconsistent with s 117 of the FW Act. Ms Sweet contended that the FW Act deals in actual time, not deemed time; and as such termination of employment cannot be backdated under the FW Act.
[19] Respondent’s closing submissions at 10.
Ms Sweet argued that there is no suggestion in the FEG Act that the concepts and duties that bind liquidators in winding up a company under Part 5.6 of the CA should have any application to the decisions to be made on entitlement to advances or the payment of those advances. Rather, she argued the contrary indication is present by the very definition of “: governing instrument”. Ms Sweet argued throughout that Mr Fink’s governing instrument was his Employment Agreement. "Governing instrument" for employment under the FEG Act means any of the following that governs the employment:
(a) a written law of the Commonwealth, a State or a Territory;
(b) an award, determination or order that is made or recorded in writing;
(c) a written instrument;
(d) an agreement (whether a contract or not).
Ms Sweet contended that in the absence of a clear contrary indication, the provisions of the CA as to liquidators' duties in a winding up, including s 558, only apply in relation to the winding up of a company for the purposes of the CA and are not relevant for the determining of advances under the FEG Act.
Further to this, Ms Sweet contended the pari passu principle does not apply to the provision of advances under the FEG Act. The scheme is designed to provide advances in respect of individual employee entitlements, depending on proof of each individual employee’s claim and the terms of their respective governing instruments.
CONSIDERATION
The Tribunal, after consideration of the excellent submissions by both parties, and thankful for the assistance of written closing submissions, drew down to the essence of their respective positions as follows.
The Tribunal considered that Mr Fink was rightly aggrieved, that his loyalty to the company and his agreement to assist the Administrators in the dying days of the business resulted in his loss of his redundancy entitlement.
The Tribunal drew upon Mr. Hibbard’s final submission and the original contention provided by the Liquidators in their Statement of Facts, Issues and Contentions to sum up the argument they believed validated Mr Fink’s right to a redundancy, noting:
On its proper construction, Mr Fink’s Employment Agreement excluded the Small Business Exception. The only sensible construction of clause 9.10 must have that effect.
Further, the proper interpretation of the FEG Act means that Mr Fink’s termination must be deemed to have occurred at the time the voluntary administrators were appointed to Unlockd. This means that Unlockd was not a small business employer at the time of his termination, and he is entitled to his redundancy pay even if he is wrong about the proper construction of his Employment Agreement.[20]
and
.
In the case of Unlockd, were the employees to be treated as having been deemed to be terminated on 12 June 2018, at a time when the total workforce was 33, all those with service of more than 12 months, including Mr Fink, would be entitled to a payment on account of redundancy and compensation under the FEG Act. Our position is that the Corporations Act modifies the harsh impact of the FW Act to ensure that vulnerable staff of an insolvent entity are protected fairly and consistently.
[20] Applicant’s Supplementary Submissions at [53]-[54].
The Tribunal also noted the original submissions in the Statement of Facts, Issues and Contentions from the Respondent clearly summarises why the Secretary believes the original decision of the delegate was the correct and preferable decision, noting:

The Respondent contends that the Applicant's employment agreement does no more than confirm that the source of any redundancy pay entitlement is the NES and that redundancy pay is only payable in accordance with the provisions of the NES as a whole. Accordingly, the Respondent contends that the Tribunal should find that the small business employer exemption (which forms part of the NES) applies to the termination of the Applicant's employment. Finally, the Respondent contends that sections 556 and 558 of the Corporations Act do not affect the point in time at which the small business employer exemption must be assessed.
The Applicant's evidence is that his colleagues who were made redundant on 13 June 2018 submitted FEG claims and received redundancy payments pursuant to redundancy provisions in their Employment Agreements which are almost identical to the redundancy provision in his contract. The Applicant's application for review must be determined by the Tribunal on its individual merits and the outcomes of other FEG claims are not relevant to that process. However, the Respondent observes that as at 13 June 2018 Unlockd Operations was not a small business employer and accordingly, the small business employer exemption under the NES would not have applied to the termination of the employment of those employees.
The Tribunal sympathised with Mr Fink’s contention that his situation was unfair and absurd, because whilst his former colleagues received their entitlement to redundancy, he had missed receiving a redundancy payment of over $20,000. The Tribunal noted however that the unfairness and absurdity may not have arisen as a sole consequence of the operations of the FEG Act or the determination of the delegate.
The Tribunal observed that Mr Fink’s underpayment in the first instance was as a direct consequence of his former employer Unlockd not having sufficient reserves to ensure all staff entitlements could be paid. The situation Mr Fink finds himself in is a direct result of his employer’s lack of foresight and planning. The Tribunal fully accepts that Unlockd could not have predicted the actions of Google or subsequent court delays. However, good businesses surely must ensure they can pay staff entitlements at all times regardless of other trading factors. Indeed, an unacceptable by-product of the FEG scheme is that many businesses no longer ensure they have enough reserves to cover workers’ entitlements.
Additionally, Mr Fink’s perceived “unfair and absurd situation” arose as a direct result of the actions of the Administrators, by asking Mr Fink and others of his colleagues to work beyond 12 June 2018, thus creating the perfect storm of turning the business into a small business employer, triggering the objects of clause 119 of the FW Act, without (it would appear) first reviewing the terms of Mr Fink’s Employment Agreement to ensure the small business exemption did not apply, or advising the staff who had agreed to stay that there may be unintended consequences of their actions.
The Tribunal did not consider the Respondent’s caution that appeals to generalised unfairness were a distraction liable to lead the Tribunal into error. The Tribunal understood its task was to arrive at the correct and preferable decision on the basis of merits review within the confines of the law governing the determination. The Tribunal noted that, sadly, there are numerous cases of unintended consequences of legislation which can result in unfairness to an individual.
The Tribunal in making a determination of Mr Fink’s eligibility for inclusion of a redundancy payment as part of his FEG advance needed to determine two factors: the date of his termination and the terms in his “governing instrument”.
Date of Termination
Mr Hibbard argued the primacy of the “relevant date” in accordance with the CA was the date on which the Administrators were appointed, as the alternative would be to treat the role of that date as incidental and having no bearing on the winding up of the company or employees’ entitlements. Mr Hibbard argued at length that the Tribunal should find the relevant date of Mr Fink’s termination was the date of the appointment of the Administrators, 12 June 2018, in accordance with the principles of the CA; and not 20 July 2018, when he ceased working for the company.
Mr Hibbard asserted that the legislature clearly had the primacy of the relevant date, and the substantive effect of s 558(1) of the CA, in mind when it drafted the whole of s 558 of the CA. He argued that this was more consistent with the pari passu principle, that employees should rank equally. As the alternative would be that some employees, who are terminated for the same reason and as part of the same insolvency, would get paid redundancy payments and others would not. Mr Hibbard argued that the legislature cannot have intended that the FEG Act and the CA did not work in concert, as otherwise it would result in bizarre and unfair outcomes.
Mr Hibbard did not refer the Tribunal to any evidentiary material which would substantiate his argument about the contemplation of the drafters of the FEG legislation, nor that the operation of the CA governs the determinations of the FEG Act. The Tribunal considered the FEG Explanatory Memorandum and second reading speech of the Minister from 2012. Neither indicated that the FEG Act was intended as a continuum of the CA . The Minister stated:
In doing so the Fair Entitlements Guarantee Bill 2012 will replace the existing General Employee Entitlements and Redundancy Scheme (GEERS) and enshrine the Fair Entitlements Guarantee in legislation.
The bill will provide certainty for Australian employees who find themselves without a job and left out of pocket when their employer becomes insolvent or bankrupt and cannot pay them the employment entitlements they are owed.
It will be a good day for working Australians when this bill passes and they have certainty that their entitlements are protected even if the company they work for enters liquidation and cannot pay them what they are owed.
This bill will protect Australian employees under circumstances which are brought about through no fault or choice of their own.
This bill will ensure that Australian employees who are victims of employer insolvency or bankruptcy, where employment entitlements are owed, are supported by a government that supports Australian workers.
In doing so, this bill also enshrines Labor’s commitment to the Australian sense of a fair go by providing a legislative framework employees can rely on and an entitlement which, unlike the employment entitlements those opposite advocate for, cannot be scrapped with the flick of a pen.
The bill will protect redundancy pay, up to a maximum of four weeks per year of service. This will mean that most employees will receive all of the redundancy entitlements they are owed. (emphasis added)
The FEG Explanatory Memorandum 2012 outlined the objectives of the Bill as follows:
The primary objective of the Bill is to provide a scheme for the provision of financial assistance (called an ‘advance’) to former employees where the end of their employment is linked to the insolvency or bankruptcy of their employer. After making an advance, the Commonwealth assumes the individual’s right to recover the amount that was advanced through the winding up or bankruptcy process of their employer.
Some of the key eligibility requirements for which the Secretary must be satisfied in order for an advance to be paid include that:
the person’s employment has ended;
the end of the employment is linked to the insolvency of their employer;
the employer is in liquidation or bankruptcy; and
the person has unpaid employment entitlements that cannot be obtained from another source.
The causal link between the insolvency of the employer and the end of the person’s employment is a crucial element of the eligibility requirement. The Bill assumes that the connection exists where the end of the person’s employment came after or within 6 months of the appointment of an ‘insolvency practitioner’. This term is defined broadly to include liquidators, administrators, receivers of property and persons having possession or control of property of the employer for the purpose of enforcing a charge, lien or a security interest as defined in the Personal Properties Security Act 2009.
The Tribunal did not find that there was a legislative basis for determining the date of Mr Fink’s termination was the date on which the Administrators were appointed. The Tribunal found, as in Mi and Kable, that it had no discretion to look to a date other than Mr Fink’s date of termination being 20 July 2018. The Tribunal concluded that there was no avenue available to it to determine that date of the appointment of the Administrators,12 June 2018, could be utilised to calculate Mr Fink’s entitlement under the FEG Act. The Tribunal concurred with the findings of Senior Member Damien O'Donovan in Kable:
Unfortunately, the Tribunal has no discretion in this situation. The applicant continued to perform duties until her employment ended on 10 August 2017. Her other FEG entitlements have been calculated to reflect this reality. There is no scope for the Tribunal to determine that a date should be used to calculate benefits which is different from the actual date of the applicant's termination. Consequently, the decision under review must be affirmed.
The Tribunal having determined that s 558 of the CA had no relevance to the determination of Mr Fink’s entitlement to an advance of redundancy, it did not address the pari passu principle, as the principle does not apply to advances under the FEG scheme.
The Tribunal found Mr Fink continued to perform his duties for Unlockd, receive wages, pay income tax and accrue benefits, for an additional period of five weeks after the administrators were appointed and the majority of staff were terminated. Mr Hibbard’s assertion that nothing could be concluded from the fact Mr Fink received wages for this period, was not accepted by the Tribunal which found this payment in part offset the unfairness of the situation, as he was still in receipt of an income from Unlockd whilst the other employees were not.
The Tribunal noted there may also be some unintended consequences for Mr Fink if his termination date was calculated as at 12 June 2018 and not 20 July 2018. It could be argued this would mean Mr Fink had been given five weeks’ notice of termination if the earlier date was utilised, and he would need to return the payment for PILN. Additionally, Mr Fink’s FEG advance would need to be recalculated to reduce his leave entitlement, as it could not be accruing if he had already been terminated.
The Tribunal therefore found that Mr Fink’s employment was terminated on 20 July 2018; at which time Unlockd was a small business employer.
The Tribunal must next consider Mr Fink’s “governing instrument”, as the correlation of finding Mr Fink was employed by a small business at the time of termination is that section 121 of the FW Act operates to exclude the application of section 119 of the FW Act; and as such Mr Fink would not be entitled to an advance on account of redundancy pay under the FEG Act if his Employment Agreement included the NES redundancy standards.
Governing Instrument
Mr Hibbard argued that Mr Fink’s “governing instrument”, being his Employment Agreement, at Clause 9.10 excluded the Small Business Exception, that it was the understanding of all the parties to Mr Fink’s Employment Agreement he had a right to a redundancy payment and that as the wording of the contract was ambiguous the most favourable reading of it should be afforded to Mr Fink.
Ms Sweet observed that pursuant to s 61 of the FW Act, the NES set 'minimum standards that apply to the employment of employees which cannot be displaced'. While an employer may agree to terms and conditions of employment which are more generous than those in the NES, an employer cannot displace those minimum standards. Fundamentally, the task was to determine if Mr Fink’s contract gave rise to a more advantageous entitlement to redundancy pay, which was not subject to the small business employer exemption set out in the NES.
The Tribunal found that Mr Fink’s Employment Agreement expressly included a refence to the NES as set out in the FW Act inclusive of the small business exemption. The Tribunal found Mr Fink’s Employment Agreement was not ambiguous and did not require an analysis of its context to determine its plain meaning. The Tribunal found the wording of the clause to be straightforward and indicated that Mr Fink would receive an entitlement to redundancy in accordance with the terms of the NES as set out in the FW Act. Given the Tribunal has found the Employment Agreement was straightforward and unambiguous, there is no need to look to the surrounding circumstances of the contract.
The Tribunal could not conclude what the intention of the drafters of Mr Fink’s Employment Agreement was, as there was no evidence before the Tribunal on which to make that determination. Regardless, the Tribunal relies upon the determination of the High Court in Codelfa:
…when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.[21]
and in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (Toll):
It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations ... References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean.[22]
[21] (1982) 149 CLR 337 at 352.
[22] (2004) 219 CLR 165 at 40.

The Tribunal found it was Mr Fink’s belief his Employment Agreement included a provision for redundancy, to which he remained entitled; but again this did not indicate the terms of the employment contract were anything other than the plain meanings of the words of the contract.
The Tribunal found the meaning of the language of Mr Fink’s Employment Agreement was clear and indicated Mr Fink had an entitlement to a redundancy provision in accordance with the NES contained in the FW Act. Therefore, the small business provision applied and he had no right to an advance for redundancy under FEG. It may well be that the subjective intentions of Mr Fink’s employer were to grant him a right. However, this is not what they expressed in the clause and the plain meaning of the wording was not open to another interpretation by the Tribunal.
The Tribunal observed that Mr Fink’s Employment Agreement clearly articulated he was entitled to a higher standard of PILN than that provided under the FW Act, as determined by the delegate. The Tribunal found this indicated clause 9.10 of Mr Fink’s Employment Agreement was to be read that he was entitled to redundancy in accordance with the NES provisions of the FW Act. The Tribunal concluded that as Unlockd had not included an exemption from the small business provisions of the FW Act in Mr Fink’s Employment Agreement, as they had indicated a more generous payment of PILN, then at the date of termination he had no right to a redundancy payment as he was employed by a small business.
The Tribunal considered the striking similarities of Mr Fink’s situation to those of Ms Bullivant in Bullivant and Secretary, Attorney-General's Department [2020] AATA 2047 (Bullivant) where Senior Member Emeritus Professor P A Fairall, found at [41]:
I am mindful of the strictures contained in the observations of the Full Court in Beezley v Repatriation Commission [2015] FCAFC 165. North, Tracey and Mortimer JJ stated:
In any case before a merits review tribunal (or a first instance decision-maker), a decision can only be made on the basis of relevant and probative material. The material must be probative of the matters for which the statute provides: see Minister for Immigration and Ethnic Affairs v Pochi [1980] FCA 85; 44 FLR 41 per Deane J. If an applicant does not provide evidence and information sufficient to meet the statutory requirements, an applicant is unlikely to have the statutory power exercised in her or his favour. And unless and until a decision-maker is satisfied, or persuaded, that the requirements are met, then no occasion to exercise the power in favour of an applicant arises. In that sense, as a practical matter, it is not incorrect to say that a person “must satisfy” the requirements in the statute. To say that is not to impose an onus of proof on an applicant, but rather to recognise the operation of the legislative scheme under which the person seeks a benefit or interest... (authorities omitted).
It is important to bear in mind the requirement that a decision can only be made on the basis of relevant and probative material.
With that exhortation in mind, I make the following observations on the material before the Tribunal.
It is clear that on 8 September 2016, when administrators were appointed to the Company, it was not a SBE.[16] It had over 50 employees. At that point, the applicant had an undoubted right, if terminated by reason of an insolvency event, to make a claim for a FEG advance in respect of redundancy pay. Given that her contract was silent on redundancy pay, her entitlement to redundancy pay was governed by the FWA.
I am prepared to accept, on the basis of the applicant’s evidence, that discussions took place with the insolvency practitioners shortly after they were appointed on 8 September 2016.
Unfortunately, none of the insolvency practitioners gave evidence about the nature of relevant discussions with employees during the critical period.
The applicant’s recollection was imprecise. She could not say with whom she met or when, or indeed, exactly what was discussed. She was vague on matters of details. She did not diarise the discussions or make any note about them.
It is permissible for the Tribunal to consider all the circumstances of the case in forming a judgment about what understanding, if any, the parties reached in September or October of 2016.
On the basis of the applicant’s evidence, I accept that the applicant was encouraged to stay on, and reassured that her entitlements would be met.
There is nothing in the applicant’s evidence to suggest that the potential impact of section 121(1)(b) was explicitly raised or discussed. But the insolvency practitioners would have known, as an elementary matter, that if an employer is a SBE immediately before an employee receives a notice of termination, then section 121(1)(b) of the FWA will generally defeat a FEG redundancy claim. It does not matter if the employer was once a large employer and became an SBE during the course of administration.
I note that, until 17 October 2016, when the Company became a SBE, the applicant had a clear right under the FEG to claim an advance on account of redundancy pay if she was terminated by reason of an insolvency event. There is no evidence that, in the discussions about “staying on”, either the applicant or the insolvency practitioners referred explicitly to what the position would be if the company became a SBE by reason of a drop off of staffing levels. The applicant did not recall any such conversation. But given that any discussion about future staffing took place within the context of a staffing reduction program, it is open to infer that this was within the contemplation of the insolvency practitioners.
The evidentiary significance of the liquidator’s letter of 19 September 2018
Is the letter evidence of an agreement of the kind suggested by the applicant, formed in the week’s prior to her termination on 31 October 2016? On one hand, it suggests no more than this, that the liquidator, looking back, simply assumed that the applicant’s entitlements were governed by the FWA, and did not consider the implications of section 121(1)(b) of the FWA. In essence, this is the proposition put by the respondent’ solicitor in written submissions.[17]
However, it does not follow from this that the insolvency practitioners, at the time they discussed the possibility of staying on with the applicant, and with other employees, overlooked a matter as vital to the applicant as the status of the employer company. I would be reluctant to make such a finding.
Where an insolvency practitioner undertakes to specific employees that, in return for ongoing service their entitlements to redundancy pay will be protected (whether or not the employer becomes a SBE), section 121(1)(b) of the FWA is necessarily excluded from the agreement. Otherwise, a promise along such lines would be dishonest or at the very least negligent. If the Company is, or becomes, an SBE, and the governing instrument for employee entitlements is the FWA, then such an undertaking would be worthless.
To the extent that the applicant did respond to some inducement from the insolvency practitioners, it was on the footing that she would be protected if she was terminated after the company fell below the 15 staff threshold. This would have been an additional benefit not provided for under her existing contract of employment, which simply incorporated the FWA provisions, including the SBE exclusion.
The evidence is sufficient to support the applicant’s claim that the insolvency practitioners gave to the applicant an undertaking to protect her redundancy entitlements if she stayed on.
If the promise was given before 17 October 2016, the present issue does not arise, because the company was not a SBE. If the undertaking was given on or after 17 October 2016, then a fortiori, the promise made would and could not be subject to the small business exclusion. In either case, the governing instrument for determining redundancy pay is the undertaking giving rise to an agreement within section 5 of the FEG Act, and not the FWA.
Although her memory of events was somewhat tainted by the passage of time, the applicant was overall a credible and sincere witness. I accept her evidence that she was promised by the insolvency practitioners that if she remained with the company, she would receive her redundancy pay entitlements. I accept that in the circumstances of this particular case, the agreement provides the basis for a FEG advance in respect of redundancy pay. The basis for calculating that redundancy pay is in accordance with section 119(2) of the FWA, as set out in the Liquidator’s letter of 19 September 2018.
DECISION
The correct or preferable decision is to set aside the reviewable decision made on 6 May 2019, and to remit the matter to the Secretary with the Direction that the applicant is entitled to an advance for redundancy pay calculated in accordance with section 119(2) of the FWA.
The Tribunal has quoted at length from the decision to note the similarities in these events, to highlight the consistent issues raised in the determination, and to draw attention to the one glaring difference in these two matters the Tribunal considered crucial to its determination. The evidence before the Tribunal was that no action had been taken by the liquidator to ensure Mr Fink or indeed any staff member who had been asked to assist with the attempted sale of the company were advised of the adverse impact this may have on their entitlement to redundancy. Further no remedial action was taken to ensure their Employment Agreement, their governing instrument, was amended to remove the refence to the provisions of the NES. This is in stark contrast to the Senior Member’s finding in Bullivant:
The evidence is sufficient to support the applicant’s claim that the insolvency practitioners gave to the applicant an undertaking to protect her redundancy entitlements if she stayed on.
As in the matter of Bullivant, the Administrators of Unlockd had asked several staff, including Mr Fink, to stay on after they were appointed to assist selling the business as an ongoing concern, sadly for all this did not eventuate and all staff were subsequently terminated. The Administrators of Unlockd rightly observed that winding up a company is a difficult, complex task, to be actioned in a tight, fast-paced and often stressful environment. They went onto assert that it is the Administrators who are often making difficult decisions about when to terminate staff. They observed that if the Tribunal upholds this delegate’s decision in respect of the refusal of Mr Finks’ redundancy payment, this would undermine Administrators’ ability to ask staff to remain to help wind up business.
Whilst the Tribunal has no quibble with this statement, it is surprising that a large administrator, which has been successfully operating for many years is just coming to this realisation – as this has been the case since the FEG Act was first introduced in 2012. The Tribunal was surprised to see that so much time and effort had gone into pursuing this action but it seemed no time had been taken, or action or explanation on behalf of the Administrators had occurred at the time staff were asked to transition from Unlockd to the liquidator. If the Administrators had clarified the terms of the individuals’ employment contracts at that stage, as the Senior Member observed in Bullivant:
There is nothing in the applicant’s evidence to suggest that the potential impact of section 121(1)(b) was explicitly raised or discussed. But the insolvency practitioners would have known, as an elementary matter, that if an employer is a SBE immediately before an employee receives a notice of termination, then section 121(1)(b) of the FWA will generally defeat a FEG redundancy claim. It does not matter if the employer was once a large employer and became an SBE during the course of administration
this whole sorry situation for Mr Fink and his fellow colleagues could have been avoided.
The Tribunal noted that Mr Hibbard’s contention that it would be profoundly unfair in any insolvency if one employee were entitled to a higher return over another was slightly surprising, as this has been the case since the introduction of the FEG Act in 2012 and the basis for many applications for review before the Tribunal. If this perceived unintended consequence of the legislation is of such aggrievance to administrators, then an appeal to Government to amend the legislation would be worthy of consideration. Again, as the Senior Member found in Bullivant, this is the consequence of the legislation unless the liquidator takes action to mitigate against such an outcome.
However, it does not follow from this that the insolvency practitioners, at the time they discussed the possibility of staying on with the applicant, and with other employees, overlooked a matter as vital to the applicant as the status of the employer company. I would be reluctant to make such a finding.
Where an insolvency practitioner undertakes to specific employees that, in return for ongoing service their entitlements to redundancy pay will be protected (whether or not the employer becomes a SBE), section 121(1)(b) of the FWA is necessarily excluded from the agreement. Otherwise, a promise along such lines would be dishonest or at the very least negligent. If the Company is, or becomes, an SBE, and the governing instrument for employee entitlements is the FWA, then such an undertaking would be worthless.
The FEG Act clearly states that a person's redundancy pay entitlement is the amount of redundancy pay the person is entitled to under the governing instrument from the employer for termination of the employment. The Tribunal found Mr Fink’s redundancy entitlements were governed by his Employment Agreement at clause 9.10, which stated that if you have completed 12 months' continuous service, on termination of your employment in circumstances of genuine redundancy you will be entitled to redundancy pay in accordance with the National Employment Standards (the NES) as contained in the FW Act. Whilst much was made by the applicant about the impacts of the CA, the CA is not a “governing instrument” for employment; and its provisions are irrelevant when assessing entitlement to an advance under the FEG Act. Additionally, the Tribunal found that the provision of the CA has no bearing on the operations of the FW Act. Therefore, the Tribunal found that Mr Fink’s Employment Agreement, on a plain reading of the words, provided him with a right to a redundancy payment in accordance with the provisions of the NES as contained in the FW Act. And, as such, he was not entitled to an advance for redundancy under the FEG Act.
DECISION
The Tribunal affirms the decision under review.

I certify that the preceding 140 (one hundred and forty) paragraphs are a true copy of the reasons for the decision herein of Ms Anna Burke, AO Member

...........[sgd].............................................................
Associate
Dated: 31 March 2021

Date of hearing: 14 October 2020

Date of final submissions: 9 December 2020

Counsel for the Applicant: Mr C E A Hibbard

Applicants representative: Ms Lock, McGrath Nicol Liquidators

Counsel for the Respondent:
Ms R W Sweet

Solicitors for the Respondent: Ms Cooke, HWL Ebsworth Lawyers

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

Date of hearing:	14 October 2020
Date of final submissions:	9 December 2020
Counsel for the Applicant:	Mr C E A Hibbard
Applicants representative:	Ms Lock, McGrath Nicol Liquidators
Counsel for the Respondent:	Ms R W Sweet
Solicitors for the Respondent:	Ms Cooke, HWL Ebsworth Lawyers