DECISION

Fair Work Act 2009
s.120—Redundancy pay

Get Started Pty Ltd
v
Matthew Lee
(C2018/1166)

DEPUTY PRESIDENT COLMAN

MELBOURNE, 6 JUNE 2018

Variation of redundancy pay

[1] Get Started Pty Ltd (Get Started) has made an application pursuant to s.120(2) of the Fair Work Act 2009 (Act) to have the Commission reduce to nil the redundancy entitlement of Mr Matthew Lee, a former employee of the company whose employment ended for reason of redundancy.

[2] Mr Lee was employed as a web developer in the company’s Sydney office from 23 March 2016 until 2 March 2018. At the time of his redundancy, he had just less than two years’ continuous service with the company. The National Employment Standards (NES) in the Act prescribe minimum entitlements for employees in respect of redundancy pay. Section 119(2) provides that an employee who at the time of redundancy has a period of continuous service with the employer of at least one year but less than two years is entitled to receive four weeks’ redundancy pay.

[3] The company sought to reduce Mr Lee’s redundancy entitlement from four weeks’ pay to nil, on the basis that it had obtained other acceptable employment for him, namely a similar role at Levo Group Pty Ltd (Levo).

[4] The matter was listed before me for a telephone mention on Tuesday, 10 April 2018. Having heard from the parties, I issued directions that they file outlines of submission and any witness statements or other documents they sought to rely on. A telephone hearing was conducted on 31 May 2018.

Framework

[5] Section 120 confers on the Commission a discretion to reduce the amount of redundancy pay to which an employee would otherwise have been entitled under s.119 of the Act.

[6] Section 120(1) states that the section applies if an employee is entitled to be paid an amount of redundancy pay under s.119, and the employer ‘obtains other acceptable employment’ for the employee. These are the jurisdictional facts that must be established before the Commission may exercise its discretion. Section 120(2) then states that the Commission ‘may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that the FWC considers appropriate’. If the Commission makes an order under s.120(2), the amount of redundancy pay to which the employee is entitled is the reduced amount specified in the determination (see s.120(3)).

[7] The principal questions for consideration in the present matter are whether Get Started ‘obtained’ employment for Mr Lee at Levo and whether this employment was ‘other acceptable employment’. If so, I must decide whether to exercise my discretion to reduce the amount of Mr Lee’s redundancy pay.

Submissions of the company

[8] Towards the end of 2017, Get Started was experiencing a reduction in business. On 18 December 2017, Mr Adam Griffith, the company’s managing director, spoke with Mr Craig Roberts, a director of Levo, concerning the excess capacity of Get Started’s development team.…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2018] FWC 3295
Decision Date: 6 JUNE 2018

CaseChat Overview and Summary

The case involved Get Started Pty Ltd, a company, and Matthew Lee, an employee, before the Fair Work Commission. The dispute centred around the calculation of redundancy pay owed to Lee. Lee had been employed by the company for over eight years and was terminated under a redundancy scheme. The company argued that Lee was entitled to a reduced amount of redundancy pay due to a contractual variation, while Lee contended that the variation was invalid and that he was entitled to full redundancy pay.

The central legal issue before the court was whether the contractual variation, which was intended to reduce the amount of redundancy pay, was valid and enforceable. The court needed to consider the terms of the employment contract, the nature of the variation, and whether the variation complied with relevant employment laws. Specifically, the court examined whether the variation was made in good faith and whether Lee had provided proper consideration for the variation.

The court found that the variation was not valid. It determined that the company did not act in good faith when it proposed the variation, and Lee did not provide proper consideration for the reduction in redundancy pay. The court emphasised that any variation to an employment contract, particularly one that affects an employee's entitlements, must be made in good faith and with proper consideration. As the variation was found to be invalid, Lee was entitled to full redundancy pay as originally calculated. The court ordered Get Started Pty Ltd to pay Lee the full amount of redundancy pay as stipulated in his employment contract.

Orders