Peachey's Engineering Pty Ltd

[2014] FWC 439

[2014] FWC 439

FAIR WORK COMMISSION

DECISION

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

Peachey's Engineering Pty Ltd
(C2013/6448)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 16 JANUARY 2014

Summary: Application to vary redundancy pay for other employment - material difference in remuneration packages - obligation to pay redundancy pay reduced to 75%.

[1] This is an application under s.120 of the Fair Work Act 2009 (“the Act”) by which the Applicant, Peachey’s Engineering Pty Ltd (a wholly owned subsidiary of and which trades as Laserbond Ltd) (“the former employer”), has sought to reduce the amount of redundancy pay it must otherwise pay Mr Sean Davies (“the affected employee”). The Applicant seeks the reduction on the basis of the efforts it has made to obtain other acceptable work for the affected employee.

Background

[2] The Applicant entered into an asset sale (its client base and various major items of equipment including fabrication jigs and fixtures) with the new employer (of the affected employee), and ceased to be an employer and will cease to operate its business as a consequence.

[3] During the sale process, the Applicant agitated the matter of the employment of the existing employees by the new employer. Mr Wayne Hooper, a director of the Applicant, by way of a statutory declaration (dated 25 November 2013), claimed that he did so by repeatedly pressing for the engagement of Mr Davies by the new employer:

I recommended that Sean Davies should be employed by [the new employer] because in his position as Estimator [...] he was in frequent contact with key customers, and was intimately involved in the costing and quotation of each major job. He was also recommended because of his practical knowledge of CNC machining. [The new employer indicated] they would employ Sean subject to an interview process. [....] Sean was subsequently interviewed and employed by [the new employer] as part of the sale process.

Legislation

[4] The scale of redundancy pay is set out in s.119 of the Act. Section 120 of the Act sets out various rules and 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, 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) The amount of redundancy pay to which the employee is entitled under section 119 is the reduced amount specified in the determination.

The Evidence

[5] Following an initial conference conducted on 18 November 2013, the affected employee provided (to the Fair Work Commission and the Applicant) a copy of his prior and current contracts of employment for comparative purposes.

[6] The affected employee’s written materials and his own statements during a recorded conference (conducted on 16 January 2014) indicate that he does not cavil with the claim that his former employer obtained alternative employment with the new employer.

[7] In any event, it is enough on the basis of the uncontested statutory declaration of Mr Hooper to conclude that the former employer had been a strong motivating force making for the new employment. The statutory injunction to “obtain” the new or alternative employment does not extend to an absolute requirement to ensure that the employment was obtained exclusively by way the initiative of the (former) employer. Such a test might require that there be evidence that there was no willingness at all on the part of the new employer to seek new skills other than for the efforts of the (former) employer.

[8] That said, it remains to be determined whether the new employment was “acceptable employment” objectively considered.

[9] There is no contest that the new terms and conditions reflected those of the previous position in all respects other than one. The difference in the employment packages was reflected in the non-availability of a vehicle for private and work use for which the employer would meet all expenses.

Conclusion

[10] The new employment does not need to be identical or mirror employment. The new employment need only be acceptable employment, evaluated in an objective context.

[11] The loss of the vehicle entitlement was a material loss amounting to some $12,000-$15,000 per annum in remuneration. Mr Davies otherwise has maintained his rate of pay (of $125, 000 p/a).

[12] In the circumstances, the parties themselves (in the course of the recorded conference) reached a consent position that the former employer’s obligation to pay redundancy pay be reduced to 75%. I will determine, then, that the obligation to pay redundancy pay will be reduced by 25%, so that the former employer is required to pay 75% of the redundancy pay obligation that it would otherwise have been required to pay.

SENIOR DEPUTY PRESIDENT

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