Hamra Furniture Pty Ltd T/A Hamra Furniture v Darren Parmiter

[2014] FWC 6858

[2014] FWC 6858

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Hamra Furniture Pty Ltd T/A Hamra Furniture
v
Darren Parmiter
(C2014/6242)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 1 OCTOBER 2014

Variation of redundancy pay - s120 - uncertain award coverage - acceptable alternative employment - inability to pay.

[1] On 8 September 2014 Hamra Furniture Pty Ltd (Hamra) lodged an application pursuant to s.120 of the Fair Work Act 2009 (the FW Act) to set aside or reduce redundancy payments due to a former employee, Mr Parmiter. The application was lodged after Hamra was advised that redundancy payments were payable to Mr Parmiter. Mr Parmiter was employed under the terms of the Timber Industry Award 2010.

[2] This award refers to the National Employment Standards in the FW Act for redundancy arrangements with the exception of transitional arrangements for employees previously covered by certain other instruments and transitional arrangements for employees of small businesses, set out in the following terms:

“15.7 Small employer

(a) For the purposes of this clause small employer means an employer to whom the NES does not apply because of the provisions of s.121(1)(b) of the Act.

(b) Despite the terms of s.121(1)(b) of the Act and subject to clause 15.7(c), the remaining provisions of Subdivisions B and C of Division 11 of the NES apply in relation to an employee of a small employer who performs any of the work within the scope of this award which immediately prior to 1 January 2010 was in clause 6 of the Timber and Allied Industries Award 1999, or clause 6 of the Furnishing Industry National Award 2003 except that the amount of redundancy pay to which such an employee is entitled must be calculated in accordance with the following table:

Employee’s period of continuous service with the employer on termination	Redundancy pay period
Less than 1 year	Nil
At least 1 year but less than 2 years	4 weeks
At least 2 years but less than 3 years	6 weeks
At least 3 years but less than 4 years	7 weeks
At least 4 years and over	8 weeks

(c) Until 31 December 2014, clause 15.5 prevails over clause 15.7 where the amount of redundancy pay to which an employee is entitled under clause 15.5 and any other instrument exceeds that to which the employee is entitled under clause 15.7.”

[3] Hamra advised that, prior to this award coming into effect, Mr Parmiter was engaged pursuant to the provisions of the Furnishing Industry National Award 2003. Clause 19 of this award provided for redundancy payments which varied, depending on whether the employer was a small business. I am satisfied that Hamra was, at the time of the termination of Mr Parmiter's employment, a small business, and there is no dispute that he had been employed for some 25 years. Accordingly, Mr Parmiter has a current entitlement to 8 weeks redundancy pay.

[4] The Hamra application was made pursuant to s.120 of the FW Act which states:

‘120 Variation of redundancy pay for other employment or incapacity to pay

(1) This section applies if:

(a) an employee is entitled to be paid an amount of redundancy pay by the employer because of section 119; and

(b) the employer:

(i) obtains other acceptable employment for the employee; or

(ii) cannot pay the amount.

(2) On application by the employer, the FWC may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that the FWC considers appropriate.

(3) The amount of redundancy pay to which the employee is entitled under section 119 is the reduced amount specified in the determination.”

[5] Hamra seeks that the redundancy pay obligations be set aside on the basis firstly, that it obtained suitable alternative employment for Mr Parmiter. Secondly, Hamra asserts that the redundancy payment obligations should be set aside because it cannot pay these amounts.

[6] There is little dispute about the background information provided by Mr Hamra, the sole shareholder of Hamra. This was to the effect that following successive poor trading years, with a trading loss of some $47,000 in the year ending June 2013 and an unspecified but worsened situation in 2014, Hamra had decided to cease trading in August 2014. Advice to this effect was provided to the five employees on 15 August and these employees then commenced to work out their notice periods. Mr Hamra advised of the steps he had taken to obtain alternative employment for these employees. Whilst I am advised that positions for each of the employees were found, I have focussed on Mr Parmiter's situation.

[7] Mr Hamra identified a position which involved duties at the lower end of the combination of assembly, joinery and advanced fit-out work undertaken by Mr Parmiter. Mr Parmiter expressed concern about this work and the pay rate attaching to it and compared it with work found by Mr Hamra for another employee. Mr Hamra then arranged for Mr Parmiter to be interviewed by another joinery business. This arrangement was made on Saturday 23 August 2014. Mr Hamra informed Mr Parmiter of this opportunity on that same day. Mr Parmiter was interviewed on the following Monday and commenced his new employment on an agreed basis on Wednesday 27 August 2014. His new employment is the same distance from his home as was Hamra. It involves similar work but an approximate $3.00 per hour wage increase.

[8] Mr Parmiter does not dispute Mr Hamra's version of the events that led to this alternative employment.

[9] The alternative position put by Hamra is that it is unable to pay the award redundancy payments. Mr Hamra confirmed that the business was not currently trading and that it had sold its remaining assets. Notwithstanding this, and a loan from a family member, it had a substantial overdraft which was secured against his family home. Mr Hamra advised that he was in the process of selling his home in order to meet the anticipated significant overdraft liability when Hamra was finally wound up.

[10] Again, Mr Parmiter did not dispute this information.

Findings

[11] I have initially considered whether the redundancy payments due to Mr Parmiter should be set aside or reduced, because Hamra found suitable alternative employment for him. In this respect I have adopted the approach in Australian Chamber of manufacturers and Derole Nominees. 1 On this approach I am satisfied that the alternative employment is suitable. I acknowledge that Mr Parmiter's previous service does not appear to be recognised by his new employer but operating in his favour is a significant wage increase. It is also appropriate that I note that, had the termination of Mr Parmiter’s employment occurred a few months later, redundancy obligations would not have arisen. As it is, I am satisfied the new employment is clearly comparable, and it involves benefits and arrangements which meet the requirements for the redundancy obligations to be set aside.

[12] Irrespective of my conclusion that suitable alternative employment has been found for Mr Parmiter, it appears clear that any increase in liabilities for Hamra will need to be met personally by Mr Hamra and the information before me indicates that he is already facing a substantial personal cost in this respect. Accordingly, I am also satisfied that Hamra is unable to pay the redundancy payments specified in the Award.

Conclusion

[13] For the reasons set out above I am satisfied that the redundancy payment obligations which would otherwise apply to Mr Parmiter should be set aside in their entirety. An Order (PR556053) giving effect to this decision will be issued.

SENIOR DEPUTY PRESIDENT

Appearances:

J and S Hamra representing Hamra Furniture Pty Ltd

D Parmiter (by telephone) on his own behalf

Hearing details:

2014.

Adelaide:

September 25.

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