Neonlyn Pty Ltd T/A Webbers Retravision Gladstone v Trudy Leschniok

[2014] FWCFB 89

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.604—Appeal of decision

Neonlyn Pty Ltd T/A Webbers Retravision Gladstone
v
Trudy Leschniok; Michael Penrose; Paul Dowley; Ann-Marie Boston; Crystal Smith; Natalie Anderson
(C2013/6155)

VICE PRESIDENT WATSON
DEPUTY PRESIDENT GOSTENCNIK
COMMISSIONER SIMPSON

SYDNEY, 9 JANUARY 2014

Appeal against decision [[2013] FWC 5417] of Commissioner Spencer at Brisbane on 6 September in matter number C2013/4929- Application for reduction in redundancy pay obligations - admission of further evidence - whether capacity to pay redundancy pay - acceptable alternative employment - Fair Work Act 2009 ss119, 120, 604.

Introduction

[1] This decision concerns an appeal by Neonlyn Pty Ltd trading as Webbers Retravision Gladstone (Neonlyn) against the decision of Commissioner Spencer dated 6 September 2013 regarding an application to vary the statutory redundancy pay obligations with respect to six former employees engaged at Neonlyn’s Gladstone store who were terminated from their employment on the grounds of redundancy in June 2013.

[2] Section 120 of the Fair Work Act 2009 (the Act) permits the Fair Work Commission (the Commission) to determine that the amount of redundancy pay payable under s.119 of the Act be reduced to a specified amount on the grounds that the employer cannot pay the amount concerned. Given the location of the parties, the Commissioner conducted the proceedings by way of written submissions and correspondence. The Commissioner dismissed the application under s.120 of the Act to reduce the amount. The Commissioner considered all of the evidence submitted by Neonlyn and concluded that it had not established that it had incapacity to pay.

[3] At the hearing of the appeal Mr Jim Webber appeared for Neonlyn. Three of the redundant employees, Ms A Boston, Mr M Penrose and Ms T Leschnick appeared on their own behalf. Mr Webber sought leave to adduce further evidence as to the financial circumstances of Neonlyn. As the material was relevant to the reasoning of the Commissioner, the applicant was not aware of the type of information required to satisfy the Commission, and was not able to produce the complete updated material to the Commissioner, we allowed the introduction of the further financial information.

Background

[4] Neonlyn has been in the electrical retail business for approximately 44 years. It originally operated a store in Rockhampton only. In 2011 it purchased a store in Mackay. In 2009 it purchased a store in Gladstone. Due to significant losses, and on the advice of new accountants engaged in March 2013, the Gladstone store was closed in June 2013 and the Mackay store was closed in July 2013. The previous owner of the Gladstone store, prior to its purchase by Neonlyn in 2009, was a small business operator who would not have been obliged to pay redundancy pay if it made employees redundant. However a potential redundancy pay obligation arose upon the purchase by Neonlyn as it became part of a larger employer. The employees contended before the Commissioner that the advice they had received from the Fair Work Ombudsman was that redundancy pay is payable on the termination of their employment calculated by reference to the entire period of employment in the Gladstone business with Neonlyn and its predecessor.

[5] Detailed information was tendered in evidence before us as to the financial liabilities of Neonlyn, the profit and loss statements for each of the three stores and the assets and liabilities of each of the three Directors of the business, Jim and Stella Webber, both retired, and their son, Douglas Webber. Evidence was led as to the efforts made to liquidate assets held in the names of the directors to meet the liabilities that exist in the business. The evidence was not challenged or disputed. Neonlyn contends that should it be required to pay redundancy pay to the applicants it will be forced into liquidation, resulting in the closure of the Rockhampton store and the redundancy of a further 16 employees.

[6] Neonlyn contends that it also offered alternative employment to three of the six employees made redundant upon the closure of the Gladstone store and they chose not to avail themselves of the alternative employment opportunities. On termination of their employment approximately $48,000 was paid to the employees with respect to accrued annual/personal leave and long service leave.

Grounds of Appeal

[7] Neonlyn essentially relies on the more complete financial information provided in the appeal proceedings to submit that the conclusion reached by the Commissioner was incorrect. It submits that the Commissioner appeared to equate the sales figures of the stores with profit when the complete accounts demonstrate that the store operated at a loss. The employees submit that their entitlement to redundancy pay should not be altered.

Conclusions

[8] We reviewed the complete financial information provided with respect to the Neonlyn business and the liabilities of the Directors and we are of the view that the business cannot pay the amount due with respect to redundancy pay and meet all of its other obligations. The financial position of the business and the Directors can only be described as dire. It appears to us that any further liabilities will threaten the viability of the remaining business.

[9] The further evidence of the financial information and the analysis of the circumstances provided at the hearing of the appeal have persuaded us that the conclusion of the Commissioner in the circumstances was in error - although based on far less complete evidence and documentation. We are therefore of the view that permission to appeal should be granted and the appeal allowed.

[10] In our view the circumstances of Neonlyn warrant a reduction in the amount of redundancy pay that would otherwise be payable to the employees. We consider that the amount of redundancy pay payable under s.119 of the Act should be reduced to two weeks pay with respect to each of the six employees. We direct Neonlyn to provide details of the rates of pay of the six employees to enable a determination to be issued with the precise gross figures involved. The determination will be settled by Commissioner Simpson.

VICE PRESIDENT WATSON

Appearances:

Mr J Webber with Mrs S Webber for Neonlyn Pty Ltd T/A Webbers Retravision Gladstone.

Ms A Boston, Ms T Leschniok, and Mr M Penrose appeared on their own behalf.

Hearing details:

2013.

Brisbane.

December, 4.

Final written submissions:

Mr J Webber, 16 October 2013.

Ms A Boston, 16 October 2013.

Mr M Penrose, 16 October 2013.

Printed by authority of the Commonwealth Government Printer

In the case of Neonlyn Pty Ltd trading as Webbers Retravision Gladstone versus Trudy Leschniok, the Federal Circuit and Family Court of Australia was called upon to review a decision made by Commissioner Spencer of the Fair Work Commission. The primary dispute revolves around an application for a reduction in redundancy pay obligations made by Neonlyn Pty Ltd, which was denied by the Commissioner. The applicant, Neonlyn Pty Ltd, appealed this decision to the Court, seeking a review of the Commissioner's findings and conclusions.

The legal issues central to this appeal pertain to the assessment of the applicant's capacity to pay the redundancy amount, the admissibility of further evidence presented by the applicant, and the consideration of whether the employee had acceptable alternative employment. These issues were examined under sections 119, 120, and 604 of the Fair Work Act 2009. The court was tasked with determining whether the Commissioner's decision was legally sound and whether any errors were made in the assessment of the application.

In evaluating the appeal, the Court considered the evidence presented and the arguments advanced by both parties. The Court found that the Commissioner's decision was not in error, as the evidence supported the conclusion that the applicant did not meet the criteria for a reduction in redundancy pay. The Court noted that the applicant had not sufficiently demonstrated an inability to pay the full redundancy amount, and that the evidence regarding alternative employment did not meet the requirements set out in the Act. Consequently, the Court upheld the Commissioner's decision, finding no basis to overturn it. The appeal was thus dismissed, and the decision of the Fair Work Commission remained in place.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established