GM+Je Walker Pty Ltd T/A Gateway Regional Property Services v Shirley Gunningham
[2014] FWC 4335
•8 AUGUST 2014
| [2014] FWC 4335 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.120—Redundancy pay
GM+JE Walker Pty Ltd T/A Gateway Regional Property Services
v
Shirley Gunningham
(C2014/4543)
COMMISSIONER GREGORY | MELBOURNE, 8 AUGUST 2014 |
Application for variation of redundancy pay.
Introduction
[1] Ms Shirley Gunningham has been employed by GM + JE Walker Pty Ltd T/A Gateway Regional Property Services (“Gateway”) since September 2008. She worked as a cleaner at the Hamilton site of the Department of Primary Industries (DPI), on a part-time basis, under a contract Gateway had with the DPI to provide cleaning services at the site. Unfortunately, Gateway were not successful in re-tendering for the contract when it came up for renewal in the first half of 2013. Ms Gunningham was accordingly terminated on 31 May 2013.
[2] This matter has a long history. Ms Gunningham first made a complaint to the Fair Work Ombudsman in relation to her wages and conditions. An investigation was conducted and the outcome provided to both parties on 2 September 2013. It concluded that Ms Gunningham was entitled to 4 weeks pay in lieu of notice and 8 weeks redundancy pay. On 21 November 2013 the Ombudsman wrote to Gateway confirming it had advised the FWO it would pay Ms Gunningham her outstanding pay in lieu notice entitlements, and make an application under s.120 of the Fair Work Act 2009 (Cth) for an exemption in relation to its redundancy pay obligation on the basis it was unable to pay the amount. However, despite making that commitment a further six months elapsed before it made that application.
[3] Section 120 of the Act states:
“(1) This section applies if:
(a) an employee is entitled to be paid an amount of redundancy pay by the employer because of section 119; and
(b) the employer:
(i) obtains other acceptable employment for the employee; or
(ii) cannot pay the amount.
(2) On application by the employer, the FWC may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that the FWC considers appropriate.
(3) The amount of redundancy pay to which the employee is entitled under section 119 is the reduced amount specified in the determination.” 1
[4] It is also noted that Ms Gunningham was employed under the terms and conditions of the Cleaning Services Award 2010 2(the Award). Sub clause 14.5 of the Award deals with “Change of contract” situations, where a cleaning contract changes from one cleaning contractor to another. It provides that the redundancy payment obligations in s.119 of the Act do not apply to an employee of the outgoing contractor where “the employee ... agrees to other acceptable employment with the incoming contractor,” and “the outgoing contractor has paid to the employee all of the employee’s accrued statutory and award entitlements on termination of the employee’s employment.”3
[5] It also continues “to avoid doubt” to make clear s.119 does apply where the employee is not offered acceptable employment with either the outgoing contractor or the incoming contractor. This is the case in the present matter, as Ms Gunningham was not offered any further work with either Gateway or the new contractor, so clearly the exemption from s.119 in sub clause 14.5 of the Award has no application in this matter.
The Issue to be Determined
[6] The following issues are to be determined.
1. Does Gateway have an obligation to pay an amount of redundancy pay to Ms Gunningham under s.119 of the Act?
2. If so, is it appropriate to reduce that entitlement because Gateway cannot pay the amount otherwise due to Ms Gunningham and again, if so, by what amount?
The evidence and submissions
[7] Gateway submitted a form F1 in May 2014 seeking an exemption from having to pay Ms Gunningham 8 weeks redundancy pay owed to her. It set out the grounds upon which the exemption was sought in the following terms:
“1. The redundancy occurred by reason of the cancellation of contract by the Applicant’s client. The Respondent had at all times only been employed by the Applicant on single contract and work site of this client and the Applicant was unable to offer the Respondent other work on another work site upon the contract cancellation.
2. The Applicant did everything possible to ensure the continuance of the Respondent’s employment. This included the re-tendering for the continuation of its contract.
3. The Applicant has already been financially disadvantaged by paying the Respondent 4 weeks pay in lieu of notice. This amounted to $1,364. NetBank receipt provided dated 25th February, 2014.
4. The application of Section 119 to pay the 4 weeks pay in lieu was in itself unconscionable and unfair having regard to the fact that it was impossible for the Applicant to provide the required notice of termination (4 weeks) in compliance with the Act. This is bearing in mind that the Applicant did not receive notification that it had been unsuccessful on with its tender until on or about 23rd May, 2014 and it was required to vacate the site on 31st May, 2014, thereby terminating the Respondent’s employment at this date.
…
5. The Applicant is currently insolvent and in danger of financial collapse. The current financial position of the Applicant is due to the current highly competitive trading conditions within its industry. This has resulted in a material contraction of the Applicant’s business (with the loss of a dozen contracts in the last 12 months) with the reduction in the viability. With the Applicant’s bank facility being fully drawn the Applicant is now only able to continue trading with the added support of its family backers.” 4
[8] Gateway did not provide further written submissions in accordance with the directions issued, however, it did provide various additional documents. These included:
- A letter from its accountants dated 29 May 2014 indicating Gateway have a banking facility which is almost fully extended, and is currently insufficiently resourced to meet current expenses and, as such, is relying on supplementary support from the “Walker family.” The letter further stated it believed the entity was “at risk of becoming insolvent”. 5
- A word document ‘summary’ of the contracts cancelled during the twelve month period ending 31 May 2014.
- A screen shot from the Commonwealth Bank of the CPL Business transaction history which stated that the particular account had an amount of $634.17 available. 6
[9] Mr Grant Walker appeared on behalf of Gateway. He was unable to provide a clear explanation as to why it had taken twelve months from the date of Ms Gunningham’s termination to make the s.120 application, but stated they were “taking it in,” 7 and were unaware of the requirement to pay Ms Gunningham a redundancy payment when they lost the cleaning contract until advice received from the Fair Work Ombudsman (FWO). However, Mr Walker stated that despite being advised by the FWO in November 2013 of the requirement to pay Ms Gunningham 8 weeks redundancy pay he did not believe “they were pursuing it,”8 and he did not provide a precise reason as to why the current application was not lodged until May 2014.
[10] In response to a question from the Commission about the number of contracts Gateway has lost in the past twelve months Mr Walker indicated “the contracts are probably about 75 percent of what we had,” 9 and the documents it provided confirm it lost twelve contracts in the last twelve months. As a consequence it submits it is “trading in difficulty”10. In response to a further question from the Commission Mr Walker confirmed the Company is not in administration, receivership or liquidation, but is receiving financial support from family members.
[11] Gateway also acknowledges it has a legal obligation to pay redundancy entitlements to Ms Gunningham, however, it submits if required to pay the amount owed to her it could be pushed into liquidation. 11 Mr Walker also stated that because Ms Gunningham had now received her pay in lieu of notice this should provide further support for the present application.
[12] Ms Gunningham provided a brief statement opposing the application, indicating at the outset she wanted “nothing more than I am entitled to”. 12 She also made reference to a range of issues during her employment with Gateway, including late payment of wages, underpayments, and problems obtaining payslips, which are not necessarily directly relevant to this application.
[13] She also submits she was a loyal and hard-working employee during her time with Gateway, but this was not always reciprocated. For example, she submits she was not provided with written notice of her termination, and only received a phone call asking her to contact the other staff members to tell them we “no longer had jobs.” 13
[14] She also submits it is not only her former employer who is experiencing difficulties; the past twelve months have been very difficult for her as well. She submits she had to wait 6 weeks to receive Centrelink payments, because she had an entitlement to redundancy payments, and it took a further six months before she found other work. However, she is now working only nine hours a week, compared to her previous role at Gateway which provided 20 hours each week.
[15] Ms Gunningham submits, in summary, she has been treated unfairly and it has taken over a year for this matter to be resolved. In her submission the loss of the DPI contract at Hamilton “is not (her) fault” and she was a reliable, hardworking staff member who is simply seeking the entitlements due to her. 14 In this context her work performance does not appear to be in question given the letter Gateway provided to her after her termination indicating “she is an experienced cleaner who has always completed her work tasks with our Company both diligently and willingly. We would rank her as one of our best cleaners and we would not hesitate in offering her such further work as may be available in the future.”15
Consideration
[16] I have no reason to doubt the past twelve months have been very difficult for both Gateway and Ms Gunningham. Gateway has not been successful in re-tendering for some contracts, in part, because of a decision by State Government Departments to let contracts on a Statewide or regional basis, rather than in a more limited way as had been the case in the past. The issues Ms Gunningham has been dealing with are also set out in her submissions and don’t need to be restated at this point.
[17] It is also clear that Ms Gunningham has an entitlement to redundancy payments under s.119. As indicated at the outset, the exemption from s.119 in sub clause 14.5 in the Award is not relevant in the present circumstances and Mr Walker, on behalf of Gateway, does not dispute the entitlement exists, after having it confirmed by the FWO.
[18] In addition, the amount involved, given Ms Gunningham only worked part time on the relatively low hourly pay rates contained in the Award, is not an excessive amount, (although it is acknowledged it is not insignificant given the circumstances of Gateway and Ms Gunningham.) In terms of what that amount equates to Ms Gunningham was employed in September 2008 and dismissed in May 2013. Under the scale of payments provided for in s.119 of the Act her length of service of “at least four years but less than five years” equates to an entitlement equivalent to 8 weeks pay.
[19] In coming to a decision in this matter I have had regard to the factors considered relevant in other decisions of the Tribunal. In PYL Nominees Pty Ltd ACN 120 344 649 as Trustee for the Lesina Family Trust t/as Mundi Clothing Co 16, Commissioner Raffaelli had regard to various factors including:
- the impact of any order on the employees rights under GEERS;
- the fact that reducing the entitlements of these employees will have no beneficial effect on other employees. This is not a case where reducing the payments to some, may enhance the prospects of other employees being able to remain in employment;
- the service of the employees and their relatively low level of remuneration.” 17
“ the possibility that Mundi is or will be insolvent and the effect that any order may have on the status of employees as potential creditors;
[20] There were six employees involved in that matter with a total redundancy entitlement of $32,000. The Commissioner concluded:
“[32] I have balanced all the material before me and have decided in all the circumstances to give greater weight to the predicament of the employees.
[33] I have determined not to reduce the amount of redundancy pay due.” 18
[21] In Moltoni Waste Management v P. Fairs, R. Ellen and K. Birkitt 19, Commissioner Bissett stated:
“[25] The discretion to grant an application to vary redundancy pay is a broad discretion.” 20
[22] She also dismissed the employer’s application but in doing so appears to have been influenced by the fact an order in favour of the applicant employer would remove the employees’ redundancy entitlements and, in doing so, also remove their ability to access GEERS payments in respect of these amounts if they became available. It is also noted in that matter that the employer had already ceased trading. Commissioner Bissett concluded:
“[33] In all of these circumstances I have determined not to grant the applications as sought by MWM. I shall not reduce the amount of redundancy pay on the basis that the employer cannot pay.” 21
[23] These decisions suggest that in dealing with applications like this under s.120 the Commission generally has a broad discretion, having regard to all the circumstances, and I have approached the determination of this matter in that way. I have concluded that the following circumstances are of particular relevance in coming to a decision.
[24] Firstly, the redundancy entitlement of Ms Gunningham in terms of an amount of money is relatively small. She was a part-time employee, working twenty hours each week at an hourly rate at the time of her termination of $19.71. I am uncertain as to what her precise redundancy entitlement is but it would appear that it is not more than $3,000. As indicated, this is not an insignificant amount. However, Gateway acknowledged in the proceedings that despite having lost 12 contracts in the past 12 months it still has 75 percent of its contracts on foot. Therefore, an amount of around $3,000 is relatively small when compared with its weekly or fortnightly payroll, together with its other costs of doing business.
[25] However, while the Commission was not provided with anything like complete details of Gateway’s current financial position it is acknowledged that the loss of contracts in the recent past has had a significant impact on the business. I have no reason to doubt the submissions of Mr Walker that it has a banking facility of almost $300,000 dollars which is close to being fully extended, and individual directors have made contributions in recent times to cover fortnightly payroll expenses. Clearly, it is to be hoped Gateway can trade through these difficulties and continue to operate successfully. However, it does not appear that its predicament can be compared with that confronting the employers in the decisions referred to previously.
[26] It is also clear that Employers generally have obligations under Awards and Agreements which are to be observed and complied with. I also accept they may take issue with the rationale for why some of those obligations exist, as Mr Walker has done in the present matter, but these are issues for another time. For the time being they continue to be part of the costs of “doing business.”
[27] In conclusion, I have balanced the various considerations in this matter and in a similar manner to Commissioner Raffaelli in the decision in PYL Nominees have decided, in all the circumstances, to give greater weight to the predicament of the employee, Ms Gunningham. I therefore reject the application.
[28] I add the following comment, acknowledging it goes beyond the scope of the matters to be determined in this application. Ms Gunningham has already waited for more than twelve months for her redundancy entitlements to be paid to her. She can presumably wait a little longer. In these circumstances, and particularly given the issues Gateway is currently working through, it is perhaps not unreasonable for it to now have a period of four weeks from the date of this decision to finally make the payments due to her.
COMMISSIONER
Appearances:
Mr Grant Walker appeared on behalf of the Applicant.
Ms Shirley Gunningham appeared by telephone on her own behalf.
Hearing details:
2014.
Melbourne:
11 June.
1 Fair Work Act 2009 (Cth) at s.120
2 MA000022
3 Ibid at cl.14.5(b)
4 F1 application lodged 21 May 2014 at page 3 and 4
5 Letter from Michael Grimwood dated 29 May 2014
6 Netbank statement dated 21 May 2014
7 Transcript at PN35
8 Ibid at PN45
9 Ibid at PN51
10 Ibid at PN53
11 Ibid at PN82-PN83
12 Statement of Shirley Gunningha, dated 2 June 2014 at para 1
13 Ibid at para 5
14 Ibid at para 7
15 Letter from Grant Walker dated 4 June 2013 and submitted by email on 4 June 2013
16 [2011] FWA 1581
17 Ibid at [28]
18 Ibid at [32]-[33]
19 [2012] FWA 5590
20 Ibid at [25]
21 Ibid at [33]
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