Hillside Church Inc Welfare Fund T/A First Choice Employment
[2011] FWA 1530
•11 MARCH 2011
[2011] FWA 1530 |
|
DECISION |
Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay
Hillside Church Inc Welfare Fund T/A First Choice Employment
(C2011/3259)
COMMISSIONER CLOGHAN | PERTH, 11 MARCH 2011 |
Application to vary redundancy pay for other employment or incapacity to pay.
[1] On 9 February 2011, Hillside Church Inc Welfare Fund T/A First Choice Employment (FCE) (“the Employer”) made application to vary the redundancy pay otherwise due under the National Employment Standards to certain employees listed below in paragraph [3].
[2] The application is made pursuant to s.120 of the Fair Work Act 2009 (“the Act”) and the Employer states there are two reasons why it is seeking to vary the redundancy pay of employees. The reasons are that the employees have obtained alternative acceptable employment for the employees and also the Employer’s incapacity to pay the amounts.
[3] The employees and their redundancy entitlements are as follows:
• Ms Kathy Rogerson | 11 weeks |
• Ms Rosie Coyle | 8 weeks |
• Ms Trace Pezzali | 4 weeks |
• Ms Angie Ryan | 7 weeks at 2 days per week |
• Mr Clive Shailer | 7 weeks at 3 days per week |
• Ms Cherie Goh | 4 weeks at 2.5 days per week |
• Ms Christine Villaroya | 4 weeks at 3 days per week |
• Ms Marcheta Wentzel | 4 weeks at 15 hours per week |
[4] The application was the subject of a procedural conference on 22 February 2011 and a hearing on 25 February 2011.
[5] At the hearing, the following persons gave evidence in order of appearance:
- Mr McAllister, Senior Pastor and Chairman, FCE Board;
- Mrs Ferguson, Deputy CEO, FCE; and
- Mr Gunaratnam, Chief Financial Officer, FCE.
BACKGROUND
[6] Hillside Church is a non-denominational church in Forrestfield, Western Australia with approximately 300 people in its congregation.
[7] In 1998, FCE was successful in securing a contract to provide employment services for the Commonwealth Government. FCE was also successful in renewing its primary contract every three years following that date, however, the composite parts of the contract changed over time with some parts continuing, other parts being lost and new parts to the contract being added. FCE had offices in Forrestfield, the wider metropolitan area and Geraldton 1.
[8] In 2009, the Church, following Government restructuring of employment services, lost all its contracts. The Church received what it described as a small amount of money from the Commonwealth Government to rework its business plan and was also subcontracted by a successful tenderer to provide employment services in two particular areas. However, sufficient revenue was not being achieved to maintain a viable trading enterprise.
[9] In the 2009-2010 financial year, FCE incurred significant losses and despite “eternal optimism”, the Church “could not afford to put any money in and First Choice was not achieving a balanced or close to balance to continue, and so we felt - we had no choice but to suspend business” 2.
[10] Mr McAllister, Senior Pastor and Chairman of FCE advised the above employees and other staff on Monday 31 January 2011 that FCE would cease operations as soon as possible but no later than 28 February 2011.
EVIDENCE
[11] Mr McAllister gave evidence regarding the eight (8) employees subject to the application. The evidence is as follows.
Ms Kathy Rogerson
[12] Ms Rogerson commenced on 11 October 2004 as a full-time employee. Ms Rogerson’s salary is $43,878. Ms Rogerson has accepted a similar position with the Bayside Group which requires similar skills, competencies, location and better remuneration (details of the remuneration are provided in Exhibit A1) 3. Simply put, Ms Rogerson instead of subcontracting for the Bayside Group through FCE, is now employed directly by that employer.
Ms Rosie Coyle
[13] Ms Coyle commenced full-time employment with FCE on 8 March 2006. Ms Coyle has taken up a position with PVS Workfind. FCE was previously a subcontractor to PVS Workfind. Ms Coyle is required to provide similar skills and competencies to her new employer and receives better remuneration.
Ms Trace Pezzali
[14] Ms Pezzali commenced full-time employment on 4 January 2010. Ms Pezzali has accepted a similar work experience role with Midland Job Link and is expected to work full-time for the next two months until the birth of her child. The new role requires similar skills, competencies and Ms Pezzali is receiving remuneration greater than her previous position with FCE.
Ms Angie Ryan
[15] Ms Ryan commenced part-time employment on 13 September 2007. Currently, Ms Ryan works two days per week. FCE has negotiated for one of its longstanding business partners to employ Ms Ryan. Ms Ryan continued in ha similar role the day after FCE closed. Ms Ryan’s salary conditions are greater than her remuneration with FCE.
Mr Clive Shailer, Ms Cherie Goh and Ms Christine Villaroya
[16] All three employees were employed part-time with FCE and had commencing dates of employment of 20 September 2009, 2 November 2009 and 28 October 2009 respectively. A new and discrete remuneration package has been negotiated with At Work Australia to ensure that all three employees provide counselling services to the new employer’s clients from cessation of employment with FCE and at a higher level of remuneration 4.
[17] The Employer advised that all the above employees will not have their accrued long service leave and sick leave entitlements transferred to the new employer.
Ms Marcheta Wentzel
[18] Ms Wentzel commenced employment in July 2009 and is currently employed 15 hours per week. Ms Wentzel was paid the required notice and indicated to the Employer a desire not to return to the workforce.
[19] Mr McAllister gave evidence that only one of the employees is a member of the Church. Further, Ms McAllister had sent a letter to all employees on 16 February 2011 outlining to them the application by FCE to Fair Work Australia, and the consequences of that application. Mr McAllister advised all employees can represent themselves at FWA, and particularly, at my request that, at least one employee representative be in attendance at the conference and hearing.
[20] Mrs Christine Ferguson gave evidence that Mr McAllister provided a letter to all affected staff, the relevant paragraphs are:
“Our decision to approach Fair Work Australia is based on the fact that most FCE staff will continue to work in the same or similar job, in most cases continuing with FCE clients and services with a new employer and without a gap in employment. Many staff will transition to the same or higher salaries which meet the Fair Work requirements of staff being ‘no worse off’. As you are aware FCE’s financial situation also makes it very difficult for FCE to cover all redundancy payments.
FCE representatives, staff representatives and the HillSide Church Accountant will meet with Fair Work next week and we will advise the outcome as soon as possible. All workers can represent themselves at the meeting; however, Fair Work has requested that at least one be [in] attendance.” 5
[21] Mrs Ferguson produced in evidence an email dated 21 February 2011 sent to all staff advising them of the conference on 22 February 2011 and their ability to attend. Further, Mrs Ferguson advised staff of the hearing on 25 February 2011 6.
[22] Mrs Ferguson provided an email dated 23 February 2011 advising the affected staff that I had requested staff to attend to present their own particular circumstances, or alternatively, provide written details. Finally, Mrs Ferguson provided evidence of responses of employees to employee representation at the hearing 7.
[23] Exhibit A4 is a letter dated 24 February 2011 from Ms Kathy Rogerson who states that FCE assisted her in obtaining a new full-time position; she will receive a significant pay increase; there is no lapse of time in transitioning from the “old” to “new” employer; she feels disadvantaged in losing her accrued long service leave, and while she feels entitled to redundancy, understands that the Church is not in a financial position to make payment and does not wish to pursue the matter 8.
[24] Four employees nominated Mrs Ferguson as their representative. Of the four employees, only one person expressed a direct view to Mrs Ferguson which was that he had “no” expectation of any redundancy payment 9.
[25] Mrs Ferguson gave evidence that, although not being authorised to speak on behalf of Ms Coyle, she is aware of Ms Coyle’s views that she “she deserves all of her redundancy payment” and does “not accept any of the reasons that we [FCE] have put forward”. Finally, Ms Coyle had been requested to attend the Tribunal’s hearing into the application on several occasions but had been unwilling.
[26] Mr Gunaratnam gave evidence, as the Chief Financial Officer, that FCE made a loss of $47,408.32 for the year ending 31 December 2010. The loss was set off against accumulated retained earnings of $100,309.60 10. For the year 2011, FCE has made a loss of approximately $30,000 a month.
[27] The total redundancy payment for all employees is $48,659.50. Including accumulated losses, redundancy payments and payments to other staff, FCE would have a shortfall of $76,753.71 of income which incorporates full use of retained earnings of $52,901.28. As the Church is not in a position to make payment, FCE’s only alternative is to approach a bank to see if they can borrow the funds which would be difficult in view of the lack of trading 11.
[28] Mr McAllister, in conclusion, advised the Tribunal that the Church is, in a sense, a “creditor” to FCE and had not been paid for services it has already provided. Finally, it would be the Church which would have to make application for any funds with its revenue being reduced due to the loss of the employment services contracts.
RELEVANT LEGISLATIVE PROVISIONS
[29] Section 119 specifies the entitlement of the employees.
[30] Section 120 provides:
“(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.”
[31] Section 121 provides:
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.”
[32] The Applicant relies on s.120(1)(b)(i) primarily but has also provided evidence in relation to s.120(1)(b)(ii).
DISCUSSION AND CONCLUSION
[33] In assessing this application, it is necessary, in the first instance, to determine whether the relevant employer obtains other acceptable employment. I have interpreted “obtains” to mean that the employer achieves and assists in gaining “other acceptable employment”. I have not adopted an approach whereby the employer is required to acquire “other acceptable employment.
[34] In the hearing, the Tribunal was provided with evidence that all employees, with the exception of Ms Wentzel, have obtained other employment. In all cases, the employees are undertaking comparable roles and responsibilities to those which they were carrying out with FCE. In addition, the evidence which I have been given is that the employees have also received an increase in their remuneration and, in Ms Rogerson’s case, this was described as “significant” 12. On an objective basis, and in the absence of evidence to the contrary, I am satisfied that the FCE has obtained other acceptable employment for the relevant employees.
[35] While s.120(b) of the Act is framed in the alternative and although evidence has been given by FCE of its inability to pay the redundancy amounts, because of my finding above, it is not necessary to determine whether the Employer cannot pay the redundancy amounts.
[36] Finally, and subsequent to the application being heard, it became clear, through material provided prior to and at the hearing, that in addition to the above employees, there were a further four (4) employees of FCE. Of these four (4) employees, two (2) had resigned and were not in fact made redundant, and a further two (2) employees who were not entitled to redundancy payments in any event. In total, FCE has less than 15 employees and consequently, pursuant to s.121(1)(b) of the Act, is excluded from the obligation to pay redundancy payments.
CONCLUSION TO APPLICATION
[37] I am satisfied that FCE obtained acceptable employment for the relevant employees pursuant to s.120(1)(b) of the Act. Secondly, as a consequence of my first finding, it is not necessary to determine whether FCE has the capacity to pay the redundancy requirements. Finally, pursuant to s.121(1)(b) of the Act, I am satisfied that FCE is a small business and excluded from the obligation to make the redundancy payments in any event. In these circumstances, I will issue an Order that FCE is excluded from paying redundancy pursuant to s.121(1)(B) of the Act.
COMMISSIONER
Appearances:
Mr McAllister, Mrs Ferguson and Mr Gunaratnam for the Applicant.
Hearing details:
2011
Perth
25 February
1 PN 16
2 PN 17
3 PN 45
4 PN 56
5 Exhibit A2
6 Exhibit A3
7 Exhibit A5
8 Exhibit A4
9 PN 88
10 Exhibit A7
11 PN 131
12 Exhibit A4
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