Nony B Pty Ltd T/A Plastamasta Bendigo v Mr Francis Byrne

[2016] FWC 8947

[2016] FWC 8947

FAIR WORK COMMISSION

DECISION

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

Nony B Pty Ltd T/A Plastamasta Bendigo
v
Mr Francis Byrne
(C2016/6986)

COMMISSIONER ROE MELBOURNE, 14 DECEMBER 2016

Order sought re reduction of redundancy pay to employee - whether employer cannot pay amount – application refused.

[1] This is an application by Nony B Pty Ltd T/A Plastamasta Bendigo (Nony B) in respect of redundancy payments to Mr Francis (Frank) Byrne. The application is made under Section 120 of the Fair Work Act 2009 (the Act). Nony B seeks to substantially reduce the redundancy payment owing to Mr Byrne. Mr Brett Bynon is the owner and sole director of the Plastamasta franchise in Bendigo. He is also the owner and sole director of the Plastamasta franchise in Shepparton. Mr Byrne had responsibilities as an employee of Nony B for both franchises. It was not contested that the combined businesses employ more than 15 persons. Nony B is therefore not a small business. It is also not contested that Mr Byrne has 11 years and 10 months service. Some of that service is from an earlier transfer of business. It is therefore not in contest that Mr Byrne is entitled to be paid 12 weeks of redundancy pay at the rate of $36.75 per hour. The amount owing to Mr Byrne is $16,758.

[2] 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.”

[3] 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.

[4] Nony B provided financial statements for the four years from 1/7/2011. At the hearing they provided information for the financial year 2015/16. Those statements reveal that the company made profits as follows: 2011/12 - $339,814; 2012/13 - $94,648; 2013/14 - $51,307; 2014/15 - $87,215; and 2015/16 - $64,000. The statements also reveal that Mr Beynon paid himself wages of between $47,770 and $91,069 each year including 2015/16.

[5] Mr Byrne was advised of his redundancy after he received a copy of the application to the Fair Work Commission to reduce his redundancy entitlement. The reason for redundancy was a restructuring to reduce costs in the business. Mr Byrne’s position was the only one to be made redundant. Mr Byrne accepts that it is a genuine redundancy. Nony B has had to pay Mr Byrne other outstanding entitlements of more than $30,000 including long service leave and accumulated annual leave. By reducing wages costs Nony B expects to be more profitable.

[6] I can see no basis from the financial statements of the company for concluding that Nony B is unable to pay Mr Byrne’s redundancy entitlements. Upon further questioning of Ms A Mistica for Nony B it was said the company had some cash flow difficulties due to reduced access to credit. There was no evidence of substance that this meant that Nony B was unable to pay Mr Byrne’s entitlement.

[7] At the hearing of this matter I advised the parties that I was dismissing the application to reduce the redundancy payment as I was not satisfied that Nony B was unable to pay Mr Byrne’s entitlement. I assisted the parties to reach agreement that the entitlement will be paid as follows: one third within 7 days of the hearing, one third by 16 January 2017 and the balance by no later than 13 February 2017.

COMMISSIONER

Appearances:

Ms A Mistica and Ms J Mistica represented the Applicant employer.

Mr F Byrne represented himself.

Hearing details:

2016

Melbourne

December 9

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<Price code A, PR588513>