Paymay Pty Ltd v Jessica Downing & Christine Reynolds
[2024] FWC 1184
•10 MAY 2024
| [2024] FWC 1184 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.120—Redundancy pay
Paymay Pty Ltd
v
Jessica Downing & Christine Reynolds
(C2024/1117 & C2024/1118)
| DEPUTY PRESIDENT BEAUMONT | PERTH, 10 MAY 2024 |
Application to vary redundancy pay for other employment or incapacity to pay
This decision concerns an application (the Application) made by Paymay Pty Ltd (Applicant or Paymay) to reduce the amount of redundancy pay to which employees, Ms Jessica Downing and Ms Christine Reynolds are entitled under s 119 of the Fair Work Act 2009 (Cth) (the Act). The Applicant seeks to vary the redundancy payment of Ms Downing and Ms Reynolds to zero on the basis that it cannot pay the amount, as contemplated by s 120(1)(b)(ii) of the Act. Alternatively, the Applicant contends that Ms Downing and Ms Reynolds did not cooperate with its attempts to find them other acceptable employment.
It is uncontroversial that the employment of Ms Downing and Ms Reynolds ended for reason of redundancy. Paymay is one company within a structure of several that operate under the auspices of ‘Moneyplus’. Moneyplus is a loan or finance provider operating both in Western Australia and the Eastern states. The branch of Moneyplus in which Ms Downing and Ms Reynolds worked was located in the suburb of Balcatta, Western Australia (that branch was also referred to as the Westminster branch). The Balcatta branch had been closed by the Applicant because of its inability to generate sufficient business.
With the consent of the parties and in light of the redundancies having arisen from the same factual circumstances, I determined to hear the applications together. All parties were self-represented at hearing.
Having considered the evidence and submissions, I have determined that there will be a reduction of the amount of redundancy pay to which Ms Downing and Ms Reynolds are entitled in the order of 50 percent. My reasons follow.
Background
Company structure and financials
Mr David Prosser, the company Director of Paymay Pty Ltd, and Ms Birgul (Rose) Gundogan, Paymay’s Director/General Manager, gave evidence on behalf of the Applicant.
In respect of Paymay’s corporate structure, Mr Prosser outlined the following in his witness statement:
a) Abaz Pty Ltd (Abaz) trades as Moneyplus being the lender of money. It operates a computer program which provides for the input and output of money via direct debits, with support provided from a head office;
b) Lapoon Pty Ltd (Lapoon) holds the lease agreement and pays for all operating costs of the ‘branch’ including wages, with each branch being a profit/loss entity; and
c) Paymay is the wage entity, such that each branch contributes to Paymay which then pays employees.[1]
At hearing, Mr Prosser clarified that Lapoon was the company responsible for running the Balcatta branch and that each branch of Moneyplus (each branch being run by a separate company - amounting to nine in total), was kept totally separate, with each branch standing alone. Mr Prosser acknowledged that circumstances did at times arise where other branches were forced to cover the cost of a branch that was not profitable, particularly where a branch had just started business.
Mr Prosser noted that ‘VicPark’ and ‘Lapoon’, as was the case with some other branches, had contributed very little toward wages, such that other branches had been subsidising those poorer performing branches.[2] Each branch operated a separate ‘Abaz’ bank account utilising the name of that branch – such as Moneyplus ‘Balcatta’.[3] Mr Prosser added that head office paid rent and monthly expenses on behalf of Lapoon.[4]
At hearing, Mr Prosser further described ‘Abaz’ as the lending vehicle, comparing it to a trust account where money was transferred to, but the entity stood alone.
Initially it appeared that from Mr Prosser’s witness statement, that the written evidence relied upon by the Applicant was somewhat confused. For example, whilst purporting that one entity assumed responsibility for wage payment, Mr Prosser later detailed that another entity held that responsibility. However, at hearing Mr Prosser explained that each branch would make a payment to Paymay for wages and Paymay would then make the payment of wages to employees.
Attached to Mr Prosser’s witness statement were several documents purported to evince the financial circumstances of the Applicant.
The first, a letter from SN Partners Accountants & Business Advisors, stated that it acted as the accountant for ‘Lapoon Pty Ltd – Money Plus Balcatta’ and that the company was making constant losses year by year. The letter continued:
…Based on the financials and tax returns for the years 2021, 2022, and 2023, it suggests that business is making losses year after year.
Further be advised that the management have provided us with current financial figures for the period from 01/07/2023 to 31/01/2024, it again follows the losses trend as prior years.[5]
Mr Prosser furnished an excel spreadsheet titled ‘Moneyplus Balcatta Feasibility’ (Annexure 2 to his witness statement), which detailed monthly losses over the period of July 2023 until January 2024, in the vicinity of $4,499.00 to $10,032.00 a month.[6] It was unclear on the face of the document whether the purported ‘monthly loss’ was incurred by the Applicant or other entities within the group. However, Mr Prosser’s evidence was that the document was the feasibility/report (monthly summary) for Lapoon.[7]
Annexure 3 to Mr Prosser’s witness statement was a table, titled ‘Loans – Financial Report for the period 26/06/2023 to 21/072023’, which appeared to show two new loan sales in the period and 20 existing loan sales with total fees and interest amounting to $15,231.00 for the Moneyplus Balcatta branch.[8] Similar statements were provided for ‘Moneyplus Balcatta’ for August 2023, September 2023, October 2023, November 2023, December 2023, and January 2023.[9] The Applicant described the documents as providing the seven monthly gross profit for the period of July 2023 to January 2024, presumedly for the Balcatta branch. However, the entity referred to in each of the six tables was ‘ABAZ Pty Ltd’. As of January 2024, there had been one new loan sale and 14 existing loan sales, with total loan sales amounting to $8902.20.
Annexure 4 appeared to be a table with multiple columns presumedly representing the other entities of Moneyplus or locations in which it was operating. Data from all columns on the table, save one, had been redacted. The one that was not redacted was for ‘BC Lapoon’. The table was titled ‘July 2023 EFT For Accounts Payable – Payments to be processed on Monday 10 July 2023’. Rows on the table covered subject matter such as ‘rent’, ‘rent outgoings’, ‘electricity’ and ‘water charge’. Each table that followed the July 2023 table had the same heading apart from the date, which was attributable to a particular calendar month in the period (August 2023 through to January 2023). Again, each of the tables had data redacted for the other entities/locations. The table for January 2023 showed ‘BC Lapoon’ had a ‘Current Balance less payment’ of $-3,947.84. It is to be appreciated that the tables included as Annexure 4 did not set out wage payments.
Annexure 5 again appeared to be a table with multiple columns, the columns presumedly representing the other entities of Moneyplus or locations in which it was operating. Data from all columns on the table save one, had again been redacted. The one that was not redacted was for ‘BC Lapoon’. The table included rows of subject matter such as ‘Google.Utube’, ‘iSecure’, ‘Telstra’, ‘Virtuelle Group - Network Services, Server Monitoring Services, Webroot Subscription, Phone&Rent’ and ‘West Coast Off Supply’. The table was titled ‘July 2023 EFT For Accounts Payable - Payments to be processed Tuesday 18/072023’. Each table that followed the July 2023 table had the same heading apart from the date, which was attributable to a particular calendar month in the period (August 2023 through to January 2023). As of January 2024, the ‘Current Balance minus payments’ equalled $1,823.21.
Annexure 6 to Mr Prosser’s witness statement was the ‘Financial Statements’ for Paymay for the year ended 30 June 2023. That report shows that the net profit/loss for the Applicant in 2023 was a loss of $74,562.00 and the year prior, $40,426.00.
Also attached to Mr Prosser’s witness statement was an invoice for an ‘ASIC Industry Funding Levy’ in the amount of $51,139.00 payable on 13 March 2024 by ABAZ Pty Ltd.
Ms Gundogan gave evidence that Moneyplus Balcatta had experience consistent losses compared to the previous year (presumedly 2023) and that Ms Downing was aware that sales were decreasing.[10] Ms Gundogan attributed the Applicant’s financial difficulties, primarily due to a decline in sales and an increase in debt. It is noted that in the applications to reduce Ms Downing’s and Ms Reynolds’ redundancy payments, Ms Gundogan spoke of the Westminster location closing.[11] However, as already noted, Mr Prosser gave evidence that the Westminster branch was the Balcatta branch.
Employment of Ms Downing
Ms Downing commenced her employment with the Applicant on 15 March 2017 as a Customer Service Officer.[12] Effective 24 July 2017, her position was changed to ‘Secondment to Branch Manager’ and thereafter, in May 2019, she was appointed to the position of Branch Manager.[13]
Ms Downing stated that she was notified on 10 January 2024 that Moneyplus Balcatta would be merging with Moneyplus Online Lending and that her position would be made redundant.[14] At hearing, Ms Downing candidly acknowledged that the loan sales at the Balcatta branch were down.
On 8 February 2023, the Applicant requested that Ms Downing (and Ms Reynolds) email her an updated resume so that it could be forwarded it to the Applicant’s competitor:[15]
Hi Jessica and Christine
I wanted to reach out to share an opportunity that has come up at one of our competitor companies. I had a productive conversation with them earlier today, and they expressed a keen interest in considering candidates like yourselves.
They are currently looking to fill roles similar to what you both excel in. The positions come with competitive salaries ranging from $55,000 to $60,000, and I’ve been assured that they are open to negotiating based on your experience and qualifications.
Could you please send me your updated resumes by tomorrow? I’ll make sure to forward them to the appropriate contacts at the company.
Regards,
Rose Gundogan[16]
Ms Downing responded on that same day, stating:
Hi Rose,
Thank you for thinking of me but I am wanting to move away from the loans/finance industry.
I have a few promising leads within different industries.
I appreciate the offer though.
Kind Regards,
Jess[17]
Ms Downing confirms that she received the abovementioned email from Ms Downing.[18] However, in response to the request to forward her resume, Ms Downing noted that there was no guarantee of a position with this company and she was concerned about the issue of the competitor clause in her employment contract.[19] Ms Downing stated that she had signed her employment contract in good faith such that she would not be employed or start a business that competed with Moneyplus for the duration of the restraint period.[20] Ms Downing further noted that she was concerned as to where her resume was being sent given it contained personal information, which, in the wrong hands, could cause her significant damage.[21] It is for these reasons that Ms Downing declined the offer.
Ms Downing observed that on the Moneyplus website as of 10 April 2024, it stated that the company had nine physical branches operating as well as the online lending department, will all branches and online lending, processing loans under the same Australian Company Number (ACN 118 434 021).
Employment of Ms Reynolds
Ms Reynolds gave evidence that she was managed by Ms Gundogan who worked in the Moneyplus head office.[22] According to Ms Reynolds, Ms Gundogan also managed nine other branches of Moneyplus and its online branch.[23]
Ms Reynolds said that during her employment she processed finance applications under the Australian Credit License 391 104 for Moneyplus, which was the same credit license under which the remaining nine branches operated.[24] Ms Reynolds added that in her last six weeks of employment she digitised paper-based client files by scanning them so they could be transferred to the online branch, hence allowing them to continue being serviced by Moneyplus.[25]
Ms Reynolds said that on 12 February 2024, a sign was placed on the front door of the Westminster branch referring customers to the online branch and come 23 February 2024, customers were advised that the branch would merge with Moneyplus Online Lending Team.[26]
As was the case for Ms Downing, Ms Gundogan emailed Ms Reynolds on 8 February 2024, requesting a copy of her resume to provide to the Applicant’s competitor. Ms Reynolds responded to the email in the following terms:
Hi Rose
I’m actually going to wait for my letter from you of Redundancy so I can get my Superannuation, having a break for a while.
Thank you for considering me.
Kind Regards,
Christine[27]
Ms Reynolds gave evidence that the email from Ms Gundogan was an offer to facilitate an introduction to a new employer and to go through a regular recruitment process. Further, she was, as was Ms Downing, concerned that she was not provided with detail as to who would be provided with her resume and the issue concerning her post-termination restraint, was not mentioned.[28] It was because of these points, she declined the offer.[29]
Statutory framework
Part 2-2 of the Act contain the National Employment Standards (NES). Division 11 of that Part establishes entitlements to notice of termination of employment and redundancy pay. By s 119(1) of the Act, an employee is entitled to be paid redundancy pay 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.
The quantum of redundancy pay entitlements is set out in s 119(2) of the Act and operates by reference to an employee’s period of continuous service with their employer on termination. The redundancy pay period is thereafter set out in the following table:
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
Section 120 provides for redundancy pay to be varied; it provides:
120 Variation of redundancy pay for other employment or incapacity to pay
(1) [When this section applies] 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) [Amount may be reduced by amount FWC considers appropriate] On application by the employer, the FWC may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that the FWC considers appropriate.
(3) [Redundancy pay is amount in determination] The amount of redundancy pay to which the employee is entitled under section 119 is the reduced amount specified in the determination.
In the determination of an application pursuant to s 120 of the Act, the preconditions in s 120(1) require the Commission to be satisfied, first, that each employee the subject of the application has an entitlement to redundancy pay ‘because of’ s 119 and, second, that the employer has either obtained acceptable employment for the employee or cannot pay the redundancy pay to which the employee is entitled under s 119.[30]
Conditional upon the preconditions in s 120(1) being satisfied, the Commission may determine under s 120(2) whether the relevant employee’s entitlement to redundancy pay under s 119 should be reduced and, if so, by how much.[31] This requires the exercise of a broad discretionary power.[32] Pursuant to s 120(3), any determination by the Commission for a reduced amount of redundancy pay then becomes the employee’s entitlement under s 119.[33]
The principal questions for consideration in the present matter are first, whether the Applicant ‘cannot pay’ the redundancy payment amount to Ms Downing and Ms Reynolds, secondly, whether the conduct of with Ms Downing or Ms Reynolds disentitles them to all or some of the redundancy payment, and thirdly, if the answer to either of these questions is yes, whether I should exercise discretion to reduce the amount of Ms Downing’s or Ms Reynold’s redundancy payment amount.
The issue – the employer cannot pay the amount
The Applicant’s primary contention is that it cannot pay the amount of Ms Downing’s or Ms Reynolds’ redundancy entitlements. Neither party took issue that the redundancy entitlement of Ms Downing is 11 weeks ($27.83 per hour over a 76-hour fortnight)[34] and for Ms Reynolds is 8 weeks ($25.30 per hour over a 76-hour fortnight).[35]
The Applicant submitted that the Applicant has encountered severe financial challenges, as outlined in the detailed financial reports that were provided at Item 2 of its ‘Document List’.
I accept that Lapoon is in a difficult financial situation. It is evident from the materials filed and the evidence of the witnesses that the Balcatta branch has generated little business over at least the last six months prior to making the application. It appeared that Ms Downing and Ms Reynolds were accepting of this point.
However, the existence of various debts does not establish an incapacity to pay. Annexures 4 and 5 submitted by the Applicant show that Lapoon had various outgoings or debts during the period of July 2023 through to January 2024. However, those documents do not show that the Applicant could not make redundancies payments. While Annexure 4 evidenced that Lapoon had a ‘Current Balance less payment’ of $-3,947.84’, Annexure 5 showed that as of January 2024, the ‘Current Balance minus payments’ for Lapoon equalled $1,823.21. I appreciate that in respect of Lapoon there may be cash flow difficulties. Nevertheless, I am not persuaded that the Applicant ‘cannot pay’ Ms Downing and Ms Reynolds their redundancy entitlement.
The Applicant gave evidence that other entities within the corporate structure channelled funds into Paymay and that Paymay would then make wage payments to the cohort of employees working within the ‘Moneyplus’ business. At times, other entities within the group would submit additional funding into Paymay, the wage entity, to cover wage payments for those branches, who, in the relevant period, were operating at a loss. The evidence before me does not establish that this practice could not be adopted in the current circumstances. Evidence of the financial circumstances of related entities, had, to a certain extent, not been provided to the Commission. It is observed that Annexure 4 and Annexure 5, insofar as they are relevant to disclosing the financial circumstances of the other entities within the group, had been redacted. The evidence does not support a finding that other entities within the corporate structure could not adopt an approach previously engaged in, to fund the Applicant to make the redundancy payment to Ms Reynolds and Ms Downing. Whilst Mr Prosser emphasised that each branch had to stand alone, he further acknowledged that other branches had been subsidising poorer performing branches.[36]
Because I am not persuaded that Paymay cannot pay the redundancy payment amount, there is no basis for me to reduce it under s 120(1)(b)(ii).
The conduct of Ms Downing and Ms Reynolds
It is first acknowledged that the Applicant does not contend that it had obtained ‘other acceptable employment’ for Ms Downing and Ms Reynolds. Instead, it presses that Ms Downing’s and Ms Reynolds’ conduct essentially precluded the opportunity for it to obtain other acceptable employment for its former employees.
In the decision of DRW Investments Pty Ltd T/A Wettenhalls v Richards (DRW)[37] the Commission found that the conduct of an employee was a relevant consideration in determining whether or not to vary an amount of redundancy pay pursuant to an application under s 120 of the Act. At paragraph [184] of DRW, it was stated:
It is also necessary to take account of whether the employee is cooperative and willing to meaningfully engage with the employer in discussion on any offers of alternative employment. An unreasonable refusal to accept the alternative employment or a failure to meaningfully engage with the employer about objectively reasonable offers, may result in orders to reduce the redundancy pay entitlement to nil. As the authorities make plain, these are factors which may influence the Commission’s exercise of discretion under s 120 of the Act.[38]
The authorities referred to in DRW included a decision of the Full Bench of the Industrial Relations Commission of South Australia and a decision of the Full Bench of the Australian Industrial Relations Commission. Concerning the latter, in Derole Nominees[39] the Full Bench of the Australian Industrial Relations Commission stated at page 129:
The exemption provision imports the notion that an effort of a sufficient kind by an outgoing employer may cause his obligation for redundancy pay to be reduced; a decision by an employee not to co-operate with the employer may well disentitle the employee to all or some of the payment.
The question here is not whether Ms Downing and Ms Reynolds have unreasonably refused an offer of alternative employment because evidently an offer was not put before them. However, the evidence shows that the two former employees did decline to provide updated versions of their resumes on the Applicant’s request. Further, I have no reason to disbelieve the evidence of the Applicant that the resumes were genuinely required to pursue a potential opportunity of employment for the two former employees with the Applicant’s competitor.
The reasons of Ms Downing and Ms Reynolds for declining the request to provide an updated resume are, in my opinion, best articulated in the contemporaneously documented response to the request. Ms Downing declined to provide her resume because she was wanting to move away from the loans/finance industry. Ms Reynolds’ declined to provide her resume so she could access her superannuation and have a break for a while. Whilst Ms Downing and Ms Reynolds have provided further reason as to why they declined to provide an updated version of their resumes to the Applicant, I consider such reasons a recent invention rather than the genuine position adopted by the two at the time the request was made.
In my view, the conduct of Ms Reynolds and Ms Downing is a relevant consideration when it comes to determining whether I should exercise discretion to reduce the amount of redundancy pay that would otherwise be forthcoming to the two. The conduct of declining to provide an updated resume merely because that former employee prefers to access the benefits of redundancy pay may constitute a failure to cooperate with employer that, as was expressed in Derole Nominees, may well disentitle the employee to all or some of the redundancy payment.
In the circumstances before me, the evidence supports a finding that the conduct of Ms Reynolds and Ms Downing precluded the Applicant from at least pursuing further attempts to obtain other acceptable employment for the two. According to Ms Gundogan’s unchallenged evidence, the roles that the Respondent’s competitor were looking to fill were similar to those that Ms Reynolds and Ms Downing excelled in.
However, I am appreciative of the point made by Ms Reynolds and Ms Downing that whilst an opportunity was shared, it was not a job or role that had been obtained, offered, and refused. Meanwhile, the assertion of Ms Reynolds and Ms Downing, that even if they had provided their resumes they would have had to proceed through a recruitment process as any other candidate would for the potential roles, is mere speculation and carries no weight.
Having considered the conduct of Ms Reynolds and Ms Downing within the context of their evidence and that of the Applicant, I am of the view that their conduct should not result in the forfeiture of their statutory redundancy payment in full. However, I am of the view that a percentage reduction is warranted for the former employees’ refusal to provide their updated resumes.
Conclusion
On balance, I consider it appropriate to vary the amounts of redundancy payment that otherwise would have been forthcoming to Ms Reynolds and Ms Downing. I am satisfied that a 50% reduction is warranted. The conduct of Ms Reynolds and Ms Downing ultimately precluded the Applicant from engaging in a process that may have caused the Applicant’s obligation for redundancy pay to be reduced.
In circumstances where Ms Downing’s gross weekly income was $1,057.54 (gross), her statutory entitlement to redundancy pay pursuant to s 119(2) of the Act was $11,632.94. A 50% reduction, results in Ms Downing’s redundancy payment amounting to $5,816.47 (gross).
In circumstances where Ms Reynolds’ gross weekly income was $961.40 (gross), her statutory entitlement to redundancy pay pursuant to s 119(2) of the Act was $7,691.20. A 50% reduction, results in Ms Reynolds’ redundancy payment amounting to $3,845.60 (gross).
Orders will be issued separately reflecting this decision.[40]
DEPUTY PRESIDENT
Appearances:
B Gundogan of the Applicant/Paymay
J Downing, Respondent
C Reynolds, Respondent
Hearing details:
2024.
Perth (by video):
1 May.
[1] Witness Statement of David Prosser, [1]-[3] (Prosser Statement).
[2] Ibid [3].
[3] Ibid [4].
[4] Ibid [8].
[5] Digital Hearing Book, 32 (DHB).
[6] Ibid 33.
[7] Prosser Statement (n1) [6].
[8] DHB (n 5) 34.
[9] Ibid.
[10] Witness Statement of Birgul Gundogan, [5] (Gundogan Statement).
[11] Form F45A – Application to vary redundancy pay – Ms Christine Reynolds and Ms Jessica Downing.
[12] Gundogan Statement (n 10) [3].
[13] Ibid.
[14] Witness Statement of Jessica Lorene Downing, [2] (Downing Statement).
[15] Gundogan Statement (n 10) [8].
[16] DHB (n 5) 28.
[17] Ibid.
[18] Downing Statement (n 14) [3].
[19] Ibid.
[20] Ibid [4].
[21] Ibid.
[22] Witness Statement of Christine Kerry Reynolds, [2] (Reynolds Statement).
[23] Ibid.
[24] Ibid].
[25] Ibid.
[26] Ibid.
[27] DHB (n 15) 91.
[28] Reynolds Statement (n 22) [1].
[29] Ibid.
[30] Ready Workforce (A Division of Chandler Macleod) Pty Ltd t/a Chandler Macleod v Andrew Lowe and Ors[2022] FWCFB 173, [22] (Ready Workforce).
[31] Australian Commercial Catering Pty Ltd v Powell & Togia[2016] FWCFB 5467, [35]; Ready Workforce (n 30) [23].
[32] FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia [2015] FCAFC 90; 232 FCR 1; 250
IR 476, [21].
[33] Ready Workforce (n 30) [23].
[34] Form F45A – Application to vary redundancy pay – Ms Jessica Downing.
[35] Form F45A – Application to vary redundancy pay – Ms Christine Reynolds.
[36] Prosser Statement (n 1) [3].
[37] [2016] FWC 461, [184] (DRW).
[38] Ibid [184].
[39] Australian Chambers of Manufactures v Derole Nominees Pty Ltd (1990) 140 IR 123 (Derole Nominees).
[40] PR774598 and PR774601.
Printed by authority of the Commonwealth Government Printer
<PR774597>
0
5
0