Mrs Amanda Cohen v Mr Nathan Glover Summary

[2014] FWC 1103

FAIR WORK COMMISSION

DECISION

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

Mrs Amanda Cohen
v
Mr Nathan Glover
(C2013/7730)

COMMISSIONER ROE

MELBOURNE, 13 FEBRUARY 2014

Order sought re reduction of redundancy pay to employee - whether employer cannot pay amount - application granted in part - redundancy payment reduced.

[1] This is an application by Ms Amanda Cohen in respect of redundancy payments to Mr Nathan Glover. The application is made under Section 120 of the Fair Work Act 2009 (the Act). Ms Cohen seeks to substantially reduce the redundancy payment owing to Mr Glover. The business is a partnership between Ms Cohen and her partner Mr Damon Cohen (the Cohens). They operate under the trading name Titan Fencing. At the time of the redundancy there were no other employees of the business other than Mr Glover and the Cohens.

[2] Mr Glover and the Cohens attended the hearing of this matter. Sworn evidence was not given but the statements from the bar table were not challenged. Some documentary evidence of the financial situation of the Cohens was provided.

[3] I am satisfied that:

● Mr Glover was employed from May 2010 until 27 December 2013.
● Mr Glover was made redundant due to downturn in the business. During much of 2013 Mr Glover was only working 30 hours a week but continued to be paid for 38 hours per week. Mr Glover had been receiving payment for 40 hours per week but this was reduced to 38 hours during 2013.
● Mr Glover was paid more than the applicable rates in the Award which covers his employment, the Building and Construction General On-site Award 2010.
● Mr Glover was paid $1102 gross per week. Mr Glover received his notice entitlement of three weeks and also his accrued leave entitlements upon being made redundant.
● Mr Glover is entitled to 7 weeks redundancy payment pursuant to Section 119 of the Act.
● The business is burdened by significant debt. The Cohens were paid collectively $32,000 during the 2011-2012 financial year and less than this amount in the 2012-2013 financial year. The gross income generated by the business each week is now very small.

[4] Section 120 of the Act provides as follows:

“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.”

[5] I am satisfied that Mr Glover is entitled to a redundancy payment of 7 weeks because of Section 119 of the Act.

[6] The words of the legislation are quite clear. Exemption cannot be granted simply because payment of the entitlement would be inconvenient or difficult. Exemption can only be granted if the employer cannot pay. That is a situation where the employer is not financially competent, or possessed of the necessary funds to make the payment.

[7] In the current situation we are not dealing with a company with limited liability. We are dealing with a partnership. I have examined whether or not the Cohens can pay the amount. I am satisfied that the level of debt and the assets held are such that they cannot borrow to pay the amount. They do not have the available funds and their income is low. This is an exceptional circumstance. I am satisfied that the employer cannot pay the amount. Mr Glover also accepted this conclusion.

[8] After considering the submissions of the Cohens and of Mr Glover I am satisfied that the amount of redundancy pay should be reduced to three weeks pay or $3306 gross. The Cohens and Mr Glover accepted that the payment should be made by no later than 31 March 2014. The payment should be made as a bona fide redundancy payment and should be taxed (or not) according to law.

COMMISSIONER

Appearances:

Ms Amanda Cohen and Mr Damon Cohen appeared for the Applicant.

Mr Nathan Glover represented himself.

Hearing details:

2014

Melbourne and Hobart

February 7

Printed by authority of the Commonwealth Government Printer

Mrs Amanda Cohen has applied to the Federal Circuit and Family Court of Australia for a reduction of the redundancy pay owed to her by her former employer, Mr Nathan Glover. The application arose from a dispute regarding the amount of redundancy pay due under the Fair Work Act 2009. Cohen, who was employed by Glover's company, sought to enforce the full redundancy payment as stipulated by the Act. Glover contended that he was unable to pay the full amount due to financial constraints and requested a reduction of the payment.

The central legal issue before the court was whether the employer's inability to pay could justify a reduction in the statutory redundancy payment. The court had to balance Cohen's entitlement to the full amount of redundancy pay, as mandated by the Fair Work Act, against Glover's financial hardship. The court considered whether there was a statutory or common law basis for reducing the payment in light of the employer's financial circumstances.

In delivering the judgment, the court found that while employers are generally obligated to pay the full statutory redundancy amount, there are exceptions where the employer can demonstrate genuine financial hardship. The court held that Glover's evidence of his financial situation was sufficient to warrant a reduction in the redundancy payment. Consequently, the court granted the application in part, ordering a reduction in the amount payable to Cohen. The court provided detailed reasoning for the reduction, ensuring that the amount paid reflected both Cohen's statutory entitlement and Glover's financial capacity.

Mrs Amanda Cohen v Mr Nathan Glover

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established