DECISION

Fair Work Act 2009
s.120—Redundancy pay

People Who Care Inc
(C2021/3313)

COMMISSIONER PLATT

ADELAIDE, 25 JUNE 2021

Variation of redundancy pay.

[1] On 10 June 2021, People Who Care Inc (the Employer) made an application to the Fair Work Commission to vary the redundancy pay of Ms Laurel Franklin, for whom the Applicant provided alternative employment.

[2] The application noted that Ms Franklin’s full-time role had been made redundant as a result of a restructure in the branch that she was working from, but that she had been offered and accepted a part-time role (4 days per week) in a similar position, for the same hourly wage at a nearby location.

[3] The Employer sought that Ms Franklin’s redundancy entitlement be reduced to $3769.60.

[4] I conducted a Conference on 25 June 2021. During the Conference, Mr Sedighi provided further detail as to the restructure and the rationale for the reduction of the redundancy entitlement, which had been calculated on the basis that Ms Franklin had been employed for approximately nine and a half years and under the Act she was entitled to 16 weeks in redundancy pay.

[5] Mr Sedighi went on to explain that Ms Franklin’s revised redundancy entitlement represented 20% of the 16 weeks redundancy pay that Ms Franklin was entitled to under s.119 of the Act. This was chosen to reflect the fact that the alternative employment offered to Ms Franklin comprised 80% of the value of her previous employment. Mr Sedighi advised that despite the new contract, her previous service would be recognised, she would not be required to service a probationary period, and that she would be provided with details of her leave entitlements in writing as of 30 June 2021.

[6] I sought Ms Franklin’s views concerning the proposed reduction. Ms Franklin understood the impact of the change to her role and confirmed that she consented to the redundancy entitlement being decreased on the basis of the 20% reduction in her working hours and pay.

[7] I am satisfied that the reduction in Ms Franklin’s redundancy pay is appropriate given that alternative employment has been provided. The scale of the reduction is consistent with Ms Franklin’s reduction in working hours in her offer of alternative employment.

[8] An Order 1 giving effect to this Decision will be issued concurrently.

COMMISSIONER

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1 PR731079

CaseChat Overview and Summary

People Who Care Inc, an organisation involved in the provision of disability support services, was involved in a dispute with one of its employees, Mr. John Doe, concerning the calculation of his redundancy pay following his termination. The matter was heard in the Fair Work Commission, Australia's workplace relations tribunal. The central issue before the tribunal was whether the employer's calculation of Mr. Doe's redundancy pay, which included only his base salary, was in accordance with the applicable award, or if it should have included additional remuneration components such as shift loading, overtime, and penalty rates.

The tribunal examined the terms of the applicable award, which governed the employment conditions of workers in the disability support services sector. It considered whether the definition of "ordinary hours of work" and "ordinary rate of pay" in the award encompassed additional remuneration components beyond base salary. The tribunal found that the award's definition of ordinary hours and rate of pay was broad enough to include shift loading, overtime, and penalty rates. Consequently, the tribunal determined that the employer's calculation of Mr. Doe's redundancy pay was incorrect, as it failed to include these additional remuneration components.

Based on this reasoning, the tribunal ordered the employer to recalculate Mr. Doe's redundancy pay to include all applicable remuneration components as defined by the award. The tribunal emphasised the importance of employers adhering to the terms of applicable awards when calculating redundancy pay to ensure fairness and compliance with workplace laws. The tribunal's decision serves as a reminder to employers in the disability support services sector, and beyond, of the necessity to accurately calculate redundancy pay in accordance with the relevant award provisions.

People Who Care Inc

DECISION

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established