Kable and Secretary, Attorney General's Department
[2019] AATA 3963
•1 October 2019
Kable and Secretary, Attorney General’s Department [2019] AATA 3963 (1 October 2019)
Division:GENERAL DIVISION
File Number(s): 2019/1706
Re:Leanne Kable
APPLICANT
Secretary,And Attorney General’s Department
RESPONDENT
DECISION
Tribunal: Senior Member Damien O'Donovan
Date:1 October 2019
Place:Canberra
The Tribunal affirms the decision under review.
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Senior Member Damien O'Donovan
Catchwords
FAIR WORK ENTITLEMENTS – Fair Work Entitlements Guarantee Act - applicant not entitled to advance in respect of redundancy payments – Fair Work Act the governing instrument - entitlement to redundancy pay under section 119 – meaning of small business employer under section 23 - whether company has the requisite number of employees at a particular time
Legislation
Fair Entitlements Guarantee Act 2012 (Cth)
Fair Work Act 2009 (Cth)
REASONS FOR DECISION
Senior Member Damien O'Donovan
1 October 2019
The applicant was an employee of Peter O’Brien Constructions Pty Ltd (POB Constructions).
She commenced employment with that company on 20 February 2012.
In 2017, POB Constructions experienced financial problems and ceased trading around July 2017. Administrators were appointed on 14 September 2017. On 28 May 2018 liquidators were appointed.
During this period of financial difficulty POB Constructions began to shed staff. Its employees, the applicant among them, did not receive the full entitlements which they were owed.
Claims were made by former employees under the Fair Entitlements Guarantee Act 2012 (Cth) (FEG Act). The FEG Act provides for the Commonwealth to pay advances on account of unpaid employment entitlements to former employees in cases where:
(a)the employer is insolvent;
(b)the end of the employment was connected with that insolvency; and
(c)the former employees cannot get payment of the entitlements from other sources.
The applicant’s claim was submitted to the Department of Jobs and Small Business on 10 April 2018.
From 29 May 2019, following machinery of government changes, the Attorney General’s Department became the respondent.
On 16 November 2018, a delegate of the respondent made a decision under subsection 15(1) of the FEG Act that the applicant was eligible for an advance in respect of unpaid wages, annual leave (including loading), payment in lieu of notice and long service leave.[1] The delegate determined that the applicant was not entitled to an advance in respect of redundancy pay.
[1] T12, folio 256.
On 10 December 2018, the applicant applied for internal review of the delegate’s decision. On 28 February 2019, a delegate of the respondent made a decision under subsection 39(1) of the FEG Act affirming the original decision (‘the Reviewable Decision’).[2] Again the delegate determined that the applicant was not eligible for an advance in respect of redundancy pay.
[2] T16, folio 281.
On 27 March 2019, the applicant sought review of the Reviewable Decision in the Administrative Appeals Tribunal (the Tribunal).
In the course of the proceedings, the parties consented to having the application heard on the papers.
In making my decision, I have taken into account the following material:
(a)Each party’s Statement of Facts, Issues and Contentions;
(b)The Applicant’s Witness Statement filed with the Tribunal on 11 June 2019;
(c)Tribunal Documents filed pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (AAT Act), which will be indicated by their T-Reference; and
(d)Supplementary Tribunal Documents filed pursuant to s 38AA of the AAT Act, which will be indicated by their ST-Reference.
ISSUES
There is no dispute that the applicant is eligible for an advance under the FEG Act and that an effective claim has been made under that Act. What is in issue is the amount to which she is entitled and, in particular, whether she is entitled to any amount in respect of redundancy.
RELEVANT LEGISLATION
Section 23 of the FEG Act provides for the calculation of the basic amount of redundancy entitlement in respect of which an advance can be paid.
Section 23 relevantly provides as follows:
The basic amount for a person’s redundancy pay entitlement for his or her employment by an employer is so much of the entitlement as:
(a) …;
(b) does not exceed the total of:
(i) 4 weeks’ pay (at the rate relevant to working out that entitlement) for each full year of the person’s service with the employer for which the employer was required to pay redundancy pay by the governing instrument for that employment; and
(ii) if that instrument requires payment of redundancy pay for a proportion of a year (less than a full year) of the person’s service with the employer – that proportion of 4 weeks’ pay (at the rate relevant to working out that entitlement).
‘Redundancy pay entitlement’ is defined in section 6 of the FEG Act. Pursuant to subsection (5):
The person’s redundancy pay entitlement is the amount of redundancy pay the person is entitled to under the governing instrument from the employer for termination of the employment.
Therefore, in order to calculate the basic amount for a person’s redundancy entitlement in accordance with section 23 of the FEG Act, it is necessary to undertake a two-step process. First, determine the person’s redundancy pay entitlement under the governing instrument, and then apply the caps and other rules set out in section 23 of the FEG Act.
Consequently, the first question that needs to be asked, and the critical question in the applicant’s case, is what is the amount of redundancy pay that the applicant was entitled to under the governing instrument.
It is not in dispute that the ‘governing instrument’, for the purposes of determining the redundancy pay the employer was required to pay the applicant, is the Fair Work Act 2009 (Cth) (FW Act).[3]
[3] The applicant identified an ‘employment contract’ as the instrument providing for her working arrangements in her FEG claim form (T4, folio 101) but the applicant confirmed no employment contract existed and took no issue with the delegate’s finding that the instrument governing redundancy pay was the FW Act.
What is in dispute is whether any redundancy pay was payable pursuant to the FW Act.
Redundancy under the FW Act
Section 119 of the FW Act establishes an entitlement to redundancy pay in certain circumstances, and sets out how that entitlement is to be calculated. Subsection (1) relevantly provides:
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) …
(b) because of the insolvency or bankruptcy of the employer.
Section 121 of the FW Act provides that section 119 does not apply in particular circumstances. It relevantly states:
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.
Section 23 of the FW Act defines the expression ‘small business employer’ as follows:
Meaning of small business employer
(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.
(2) For the purpose of calculating the number of employees employed by the employer at a particular time:
(a)Subject to paragraph b. all employees employed by the employer at that time are to be counted; and
(b)a casual employee is not to be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis.
(3) For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.
(4) To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee’s employment, the employees that are to be counted include (subject to paragraph (2)(b)):
(a)The employee who is being dismissed or whose employment is being terminated ; and
(b)Any other employee of the employer who is also being dismissed or whose employment is also being terminated.
For completeness, it is worth noting that section 121(1) refers to a person being given notice as described in section 117(1) of the FW Act. Section 117 provides:
117 Requirement for notice of termination or payment in lieu
(1)An employer must not terminate an employee’s employment unless the employer has given the employee written notice of the day of the termination (which cannot be before the day the notice was given).
It is in this statutory context that the applicant’s redundancy entitlement must be determined. Critical to that determination is the question: whether or not POB Constructions was a small business employer immediately before the applicant’s employment was terminated. That question is determined by reference to whether POB Constructions had fewer than 15 employees immediately before that event.
FACTS
Set out below are my factual findings. My findings in relation to termination dates are based on the Entitlement Data Report prepared by the Department which is at ST1. Where there is a conflict between the termination date the relevant employee claims and the termination date that is recorded as ‘verified’, I have taken the later of the dates which is an approach which favours the applicant.
I have otherwise accepted the applicant’s evidence as accurate.
On 7 July 2017, POB Constructions was unable to continue paying wages. Up until this date the company employed a total of 17 employees plus Peter O’Brien making a total of 18 employees for the purposes of determining whether it was a small business employer.
From 7 July 2017, the company began to shed employees.
The employees whose employment was terminated prior to the date the applicant was terminated and their dates of termination are set out in the table below.
Employee
Employment Termination Date
Mr Plane
7 July 2017
Mr Thomson
7 July 2017
Mr Mulvey
8 July 2017
Mr Schumacher
14 July 2017
Ms Jeffery
20 July 2017
Mr Coyle
25 July 2017
Mr Kemp
31 July 2017
Ms Hunter
31 July 2017
Ms Miller
3 August 2017
LEANNE KABLE
10 August 2017
Following the departure of Mr Plane, Mr Thomson, Mr Mulvey and Mr Schumacher, POB Constructions’ number of employees fell from 18 employees on 7 July 2017 to 14 employees on 15 July 2017. By 10 August 2017, the number of employees had fallen to 9.
No employee, including the applicant, was given written notice of termination.
ANALYSIS
There is no dispute that the FW Act is the governing instrument in relation to the applicant.[4] It provides for the payment of redundancy in the event of insolvency. Section 121 of the FW Act excludes the obligation to pay redundancy if the employer is a ‘small business employer’ immediately before the time of the termination or at the time when the person was given notice of the termination.
[4] Respondent’s SFIC at [32].
There is no evidence that the applicant was ever given a notice of termination pursuant to section 117 of the FW Act so the relevant date for determining whether POB Constructions is a small business employer is the date of her termination – 10 August 2017.
When the applicant had her employment terminated, POB Constructions had only 9 employees. POB Constructions had met the definition of a small business employer since 15 July 2017. Accordingly, immediately before the applicant was terminated, POB Constructions was a small business employer.
In these circumstances, the applicant is not entitled to any redundancy payment under the FW Act and therefore her redundancy entitlement for the purposes of section 23 of the FEG Act is nil.
The applicant feels that this outcome is unfair and that she is being penalised for her loyalty and empathy which led her to stay on longer than other employees. The applicant contends the date that should be taken into account, for the purposes of determining her FEG entitlements, is 7 July 2017. Unfortunately, the Tribunal has no discretion in this situation. The applicant continued to perform duties until her employment ended on 10 August 2017.[5] Her other FEG entitlements have been calculated to reflect this reality. There is no scope for the Tribunal to determine that a date should be used to calculate benefits which is different from the actual date of the applicant’s termination. Consequently, the decision under review must be affirmed.
[5] T4, folio 102.
38. I certify that the preceding 37 (thirty seven) paragraphs are a true copy of the reasons for the decision herein of Senior Member Damien O’Donovan.
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Associate
Dated: 1 October 2019
Date(s) of hearing: 16 September 2019 (On the papers) Applicant: Self-Represented Solicitors for the Respondent: Ms Cooke, HWL Ebsworth Lawyers
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