DECISION

Fair Work Act 2009
s.120—Redundancy pay

Happy Lab Australia Pty Ltd T/A Happy Lab
v
Mandy Li
(C2016/4871)

DEPUTY PRESIDENT DEAN

SYDNEY, 29 AUGUST 2016

Variation of redundancy pay.

[1] On 11 August 2016 Happy Lab Australia Pty Ltd T/A Happy Lab (the Applicant) made an application pursuant to s.120 of the Fair Work Act 2009 (the Act) for an order to vary the redundancy pay entitlement with respect to its former employee, Ms Mandy Li (the Respondent). The Applicant seeks to reduce the amount of redundancy pay the Respondent is otherwise entitled to be paid to nil. The application is made on the basis that the Applicant was offered ‘other acceptable employment’ with the Respondent for the purposes of s.120(1)(b)(i). This offer, however, was rejected by the Applicant.

[2] In considering the application, further information was sought from the Applicant. On 16 August 2016 the Applicant provided a statutory declaration by Ms Anne Demkiw (Retail National Manager) in support of the application. Correspondence was also sent to the Respondent on 15 August 2016 seeking her response to the application. The Respondent was advised that: “In the absence of any response from you by 22 August, the Deputy President will proceed with the determination of the matter.” No further correspondence or communication has been received from the Respondent. In the circumstances, I am satisfied that the Respondent does not intend to oppose the application.

Background

[3] The application states that the Respondent commenced employment as a full time Assistant Manager on 20 September 2009 in its Pitt Street store. Following the Applicant’s decision to close its Pitt Street store, the Respondent’s position is to be made redundant and the Respondent is entitled to be paid 7 weeks redundancy pay in accordance with s.119 of the Act. The Applicant seeks to reduce the payment to nil on the basis of having obtained other acceptable employment for the Respondent.

[4] The Applicant submits that the Respondent was offered the same full-time Assistant Manager position at a store located in Burwood, NSW. The new position offers the same title and salary and has similar travel distance to the Respondent’s home from the store she currently works.

[5] The Applicant further submits:

“Mandy has given reason for not accepting the offer of the other acceptable employment being she wanted to go back to study in university and she would like to get out of retail industry. We have attempted further to keep Mandy’s employment by offering her a casual position in the other acceptable employment if that suits Mandy better while she is at university. Mandy rejected this offer as well.”

[6] The Applicant’s submission was confirmed by Ms Demkiw in her statutory declaration.

Relevant legislation

[7] Section 120 of the Act provides:

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, FWA may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that FWA 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.

Consideration

[8] Having considered the material provided to me in this matter, I am satisfied that the Applicant had obtained ‘other acceptable employment’ for the Respondent and the requirement in s.120(1)(b)(i) is met. In reaching this conclusion, I am guided by the decision of the Full Bench in The Australian Chamber of Manufacturers v Derole Nominees Pty Ltd 1. The position offered to the Respondent was a like position with the same company in a different location which is not unreasonably distant and with no loss of continuity of service.

[9] In all the circumstances, I consider it appropriate that an order should be made to reduce the amount of redundancy pay to which the Respondent is entitled to nil. An order to this effect will be issued.

DEPUTY PRESIDENT

1 (1990)140 IR 123.

Printed by authority of the Commonwealth Government Printer

Happy Lab Australia Pty Ltd, trading as Happy Lab, brought proceedings against Mandy Li seeking a variation of redundancy pay. The matter was heard in the Fair Work Commission. The employer claimed that the redundancy payments made to Ms Li were excessive, and the Commission should reduce the amount based on the statutory cap on the amount of ordinary remuneration that can be considered for redundancy pay purposes. Ms Li argued that the employer had not provided sufficient evidence to justify a reduction in her redundancy payout.

The central issue before the Commission was whether the statutory cap on ordinary remuneration applied to the redundancy payments made to Ms Li and, if so, whether the employer had provided sufficient evidence to support a reduction in the amount of redundancy pay. The Commission had to determine the correct amount of ordinary remuneration to be considered for redundancy pay purposes and whether the employer had demonstrated that the statutory cap applied. The employer argued that the cap should apply as Ms Li's remuneration included components that were not ordinary wages, such as commissions and bonuses. Ms Li contended that the employer had not provided sufficient evidence to support a reduction in her redundancy payout.

The Fair Work Commission found that the statutory cap on ordinary remuneration did apply to the redundancy payments made to Ms Li. The employer had provided sufficient evidence to demonstrate that Ms Li's remuneration included components that were not ordinary wages. The Commission reduced the amount of redundancy pay accordingly. The employer was ordered to pay the remaining amount of redundancy pay to Ms Li within 14 days of the decision.

Happy Lab Australia Pty Ltd T/A Happy Lab v Mandy Li

DECISION

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established