Highland Land Company Pty Ltd T/A Duraseal

[2020] FWC 844

[2020] FWC 844

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Highland Land Company Pty Ltd T/A Duraseal
(C2020/800)

COMMISSIONER WILLIAMS PERTH, 18 FEBRUARY 2020

Variation of redundancy pay.

[1] This application is made by Highland Land Company Pty Ltd trading as Duraseal. The respondent is Mr James Hall (Mr Hall).

[2] The application seeks to vary the redundancy pay to which Mr Hall is entitled under the Building and Construction General On-Site Award 2010 (the award).

[3] Before considering this application to vary the amount of redundancy pay owing, it is necessary to clarify the source of any redundancy pay entitlement for Mr Hall.

[4] The National Employment Standards in the Fair Work Act 2009 (Cth) (the Act) include standards for redundancy pay. These are set out below.

“Subdivision B—Redundancy pay

119 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

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.”

121 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.

Subdivision C—Limits on scope of this Division

123 Limits on scope of this Division

...

Other employees not covered by redundancy pay provisions

(4) Subdivision B does not apply to:

(a) an employee who is an apprentice; or

(b) an employee to whom an industry-specific redundancy scheme in a modern award applies; or

(c) an employee to whom a redundancy scheme in an enterprise agreement applies if:

(i) the scheme is an industry-specific redundancy scheme that is incorporated by reference (and as in force from time to time) into the enterprise agreement from a modern award that is in operation; and

(ii) the employee is covered by the industry-specific redundancy scheme in the modern award; or

(d) an employee prescribed by the regulations as an employee to whom that Subdivision does not apply.”

[5] As can be seen from the above, an employer under section 120 can in some circumstances apply to vary the redundancy pay if an employee is entitled to be paid because of section 119.

[6] The applicable circumstances are because the employer has obtained other acceptable employment for the employee or because the employer is unable to pay the redundancy pay.

[7] However, section 123 of the Act says that Subdivision B, which includes sections 119 to 122, does not apply to an employee to whom an industry specific redundancy scheme in a modern award applies.

[8] The current Application before the Commission states that the redundancy pay entitlement of Mr Hall arises under the Building and Construction General On-site Award 2010. This award contains the following clause:

“17. Industry specific redundancy scheme

17.1 The following redundancy clause for the on-site building, engineering and civil construction industry (as defined) is an industry specific redundancy scheme as defined in s.12 of the Act. In accordance with s.123(4)(b) of the Act the provisions of Subdivision B—Redundancy pay of Division 11 of the NES do not apply to employers and employees covered by this award.

17.2 Definition

For the purposes of this clause, redundancy means a situation where an employee ceases to be employed by an employer to whom this award applies, other than for reasons of misconduct or refusal of duty. Redundant has a corresponding meaning.

17.3 Redundancy pay

(a) A redundant employee will receive redundancy/severance payments, calculated as follows, in respect of all continuous service with the employer:

Period of continuous service with an employer	Redundancy/severance pay
1 year or more but less than 2 years	2.4 weeks’ pay plus for all service in excess of 1 year, 1.75 hours pay per completed week of service up to a maximum of 4.8 weeks’ pay
2 years or more but less than 3 years	4.8 weeks’ pay plus, for all service in excess of 2 years, 1.6 hours pay per completed week of service up to a maximum of 7 weeks’ pay
3 years or more than but less than 4 years	7 weeks’ pay plus, for all service in excess of 3 years, 0.73 hours pay per completed week of service up to a maximum of 8 weeks’ pay
4 years or more	8 weeks’ pay

(b) Provided that an employee employed for less than 12 months will be entitled to a redundancy/severance payment of 1.75 hours per week of service if, and only if, redundancy is occasioned otherwise than by the employee.

(c) Week’s pay means the ordinary time hourly rate at the time of termination multiplied by 38. Hour’s pay means the ordinary time hourly rate at the time of termination.

(d) If an employee dies with a period of eligible service which would have entitled that employee to redundancy pay, such redundancy pay entitlement will be paid to the estate of the employee.

(e) Any period of service as a casual will not entitle an employee to accrue service in accordance with this clause for that period.

(f) Service as an apprentice will entitle an employee to accumulate credits towards the payment of a redundancy benefit in accordance with this clause if the employee completes an apprenticeship and remains in employment with that employer for a further 12 months.” (Underlining added)

[9] Because the redundancy provisions in this award is an industry specific redundancy scheme, section 123 of the Act means employees covered by this award do not receive the redundancy pay provided by section 119. Instead employees to whom this award applies are entitled to the redundancy pay provided by the redundancy clause of the award.

[10] Consequently in this case section 120 of the Act does not apply because Mr Hall’s redundancy pay entitlement does not arise because of section 119 of the Act and, critically in this instance, the award does not include any similar provision empowering an employer to make an application to the Commission to vary the award redundancy pay amount to which Mr Hall is entitled.

[11] In short, an application under section 120 can only be made by an employer where the employee is entitled to redundancy payments by virtue of section 119 of the Act. That is not the case for Mr Hall. He is entitled to redundancy pay by virtue of the clause in the award not section 119. Consequently, there is no legal basis for this application by Duraseal to vary the redundancy pay to which Mr Hall is entitled. This application will accordingly be dismissed.

[12] An order [PR716798] to that effect will be issued in conjunction with this decision.

Printed by authority of the Commonwealth Government Printer

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