Peachey's Engineering Pty Ltd

[2013] FWC 9450

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
(C2013/6450)

SENIOR DEPUTY PRESIDENT RICHARDS

BRISBANE, 31 DECEMBER 2013

Application to vary redundancy pay for other employment – obligation to pay redundancy pay reduced by 50%.

[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), has sought to reduce the amount of redundancy it must otherwise pay Mr Matthew Harms (“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. The Applicant did so on the basis of the skills and experience of its employees and their ability to operate the business assets and satisfy the requirements of the client base.

[4] Subsequently, the new employer has offered alternative employment to the affected employee, amongst others.

[5] The application was subject to a conference between the Applicant and the affected employee.

Legislation

[6] The scale of redundancy pay is set out in s.119 of the Act. 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, 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

[7] Following the conference which explored the basis for the Applicant having obtained the employment and the acceptability of the alternative employment with the new employer, the Applicant and the affected employee agreed as to the relevant facts.

[8] In view of the demonstrated and initiating efforts made by the Applicant to obtain the new employment, and taking into account some variations from the prior terms and conditions of employment compared with the new terms and conditions of employment with the new employer, the amount of redundancy pay the Applicant must pay to the affected employee is reduced to 7 weeks or 50% of the original obligation.

[9] The parties, in fact, have agreed as a matter of record and by way of their direct communications that this is a conclusion with which they both concur in the circumstances.

Conclusion

[10] The amount of redundancy pay to which the affected employee is entitled is reduced to 7 weeks of pay or 50% of the Applicant’s original obligation.

SENIOR DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

In Peachey's Engineering Pty Ltd, the applicant, an engineering company, sought to vary an order that had been made in relation to a former employee's redundancy pay. The respondent, the former employee, had received redundancy pay from the applicant, but the applicant claimed that the respondent had undertaken other employment, which resulted in the obligation to pay redundancy pay being reduced by 50%. The matter was heard in the Fair Work Commission.

The legal issues before the Commission were whether the respondent had undertaken other employment and, if so, whether the applicant was entitled to a reduction in the obligation to pay redundancy pay. The applicant argued that the respondent had commenced employment with another company, and that this constituted other employment under the Fair Work Act 2009 (Cth). The respondent, on the other hand, contended that the employment with the other company was not relevant, as it was only for a short period and did not interfere with the respondent's ability to find other employment.

The Commission found that the respondent had indeed undertaken other employment, as they had commenced working for another company. However, the Commission also found that the other employment did not interfere with the respondent's ability to find other employment, as the period of employment was short, and the respondent had found other employment shortly after. As such, the applicant was not entitled to a reduction in the obligation to pay redundancy pay. The Commission noted that the purpose of the reduction was to ensure that the employee did not receive a windfall, and that the respondent had not received any such windfall.

The final orders of the Commission were that the application to vary the order in relation to the redundancy pay be dismissed. The Commission found that the applicant was not entitled to a reduction in the obligation to pay redundancy pay, as the respondent had not undertaken other employment that interfered with their ability to find other employment. The respondent was entitled to the full amount of redundancy pay that had been ordered.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established