M & S Dickson

[2011] FWA 5206

[2011] FWA 5206

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.120 - Application to vary redundancy pay for other employment or incapacity to pay

M & S Dickson
(C2011/4928)

Road Transport Industry

LEWIN, COMMISSIONER MELBOURNE, 10 AUGUST 2011

National Employment Standards - redundancy pay - application for variation by employer - small business employer - jurisdiction and power of FWA

[1] This decision concerns an application under s.120(2) of the Fair Work Act 2009 (the Act). The application seeks a variation to a perceived effect of the provisions of s.119 of the Act. Sections 119 and 120 of the Act are provisions of Division 2 of Part 2-2 “The National Employment Standards” of Chapter 2 of the Act. The provisions are set out below:

“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, 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.”

[2] The application is made by Mr Mark Dickson in relation to the redundancy of the only employee employed by Mr Dickson in the business operated by him, whose employment was terminated for reason of redundancy, by letter dated 4 July 2011. The business operates transportation services to industry in South Australia.

[3] Mr Dickson gave evidence in support of the application. In particular, Mr Dickson gave evidence in relation to his business and his capacity to pay his former employee redundancy pay. That evidence was directed to the amount of redundancy pay prescribed by s.119 of the Act.

[4] Mr Dickson’s evidence shows that while the surplus of the business over the recent trading periods is very modest it is nevertheless Mr Dickson’s intention to continue to operate the business. Moreover, Mr Dickson owns several vehicular assets and a home, all of which have attracted debts. However, it is also the case that there is a substantial equity in the assets owned by Mr Dickson.

[5] On what is before me I am not convinced that Mr Dickson lacks the capacity to pay his former employee the amount he considers the former employee is entitled to as addressed in his evidence.

[6] However, as will be seen below, the application made pursuant to s.120 of the Act must be rejected for reasons which are quite different.

[7] At this point it is appropriate to note that, for the purposes of the operation of the provisions of s.119, certain exclusions are prescribed by s.121 of the Act, which are set out below:

“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.”

[8] Importantly, Mr Dickson is a small business employer for the purposes of s.121 of the Act. It follows that by force of the terms of s.121(1)(b) the provisions of s.119 of the Act, which prescribes the redundancy pay in respect of which s.120 of the Act applies, has no application to the redundancy of the employee formerly employed by Mr Dickson. In these circumstances there is no legal entitlement prescribed by s.119 of the Act which may be varied by the exercise of the power conferred upon the Tribunal by s.120.

[9] In summary, the effect of the discussion above is that to the extent Mr Dickson’s application as filed can be dealt with by this Tribunal it can only be as a consequence of the operation of the National Employment Standards and any applicable entitlement to redundancy pay arising under s.119 of the Act. No such entitlement arises thereby. Therefore the application before me is not one in respect of which an order may be made pursuant to s.120 of the Act and must be dismissed. An order will issue accordingly.

COMMISSIONER

Appearances:

M Dickson on his own Behalf

Hearing details:

2011

Adelaide

July, 15.

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