PR Floors Pty Ltd

[2018] FWC 2605

[2018] FWC 2605

FAIR WORK COMMISSION

DECISION

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

PR Floors Pty Ltd
(C2018/1832)

COMMISSIONER MCKINNON MELBOURNE, 9 MAY 2018

Application to vary redundancy pay – acceptable alternative employment.

[1] Application has been made by PR Floors Pty Ltd (PR Floors) pursuant to section 120 of the Fair Work Act 2009 (the Act) seeking to reduce the redundancy pay entitlement of 26 former employees listed in Annexure A (the Employees) to nil because it has obtained other acceptable employment for them.

[2] A hearing of the application was held on 18 April 2018.

Relevant law

[3] 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.”

Submissions

[4] PR Floors says that in October 2017, it entered into negotiations with QEP Australia Pty Limited (QEP) for the sale of PR Floor’s business assets. It relied on the business purchase agreement between PR Floors and QEP, which included terms requiring QEP to offer employment to employees of PR Floors.

[5] Clause 9.1 of the business purchase agreement provides as follows:

“The Buyer must make an offer of employment to each Employee…”

[6] Clause 9.2 of the business purchase agreement sets out the conditions of the offers of employment to be made to the Employees including that they:

•  were conditional on completion of the business purchase;

•  were on terms and conditions substantially similar to, and on an overall basis, no less favourable than, terms and conditions of employment with PR Floors;

•  did not recognise prior service for the purposes of redundancy; but

•  recognised continuity of service for the purposes of long service leave.

[7] PR Floors says that as a result of its negotiated arrangement with QEP, the Employees were each offered, and accepted, employment with QEP in the same role at the same place and on the same terms and conditions of employment. There is nothing before me to contradict this submission and the documentary material filed in support of the application supports it. I accept the submission.

[8] Employment contracts between PR Floors and the Employees as well as letters of engagement from QEP to the Employees were filed as evidence in the proceeding. They confirm that the terms and conditions of employment offered by QEP are generally the same as those that applied at PR Floors. Consistent with its obligations under the business purchase agreement, the letters of engagement establish that QEP offered employment to each of the Employees on that basis. PR Floors says it paid the Employees their accrued entitlements on cessation of their employment, with the exception of redundancy pay and long service leave. QEP agreed to recognise continuity of service for employees in relation to long service leave but not otherwise.

[9] Two of the Employees, Christopher Breen and Ross Black, participated in the proceeding. No other employees sought to be heard. Mr Breen and Mr Black expressed concern about a three month probationary period which commenced at the start of the employment of each of the Employees with QEP on 3 April 2018.

[10] Mr Breen was also concerned that some of his working conditions had changed, noting that his annual leave did not transfer to QEP, his hours of work had reduced from 40 to 38 hours per week and he was no longer entitled to a paid meal break or overtime. Mr Black confirmed that the offer made by QEP generally seemed to replicate his employment with PR Floors.

Conclusion

[11] Mr Breen’s contract of employment with PR Floors and letter of engagement from QEP each state that his ordinary hours of work will be 38 hours plus reasonable additional hours and that his employment conditions are derived from the Storage Services and Wholesale Award 2010. While I accept Mr Breen’s submission that his conditions of employment have changed, neither paid breaks nor overtime were employment entitlements guaranteed by PR Floors.

[12] On balance, I am satisfied that the employment offered by QEP to the Employees in each case constitutes acceptable alternative employment for the purposes of section 120(1)(b)(i) of the Act. I am satisfied that PR Floors obtained this acceptable alternative employment for the Employees. In doing so, it avoided the potential loss of their employment in connection with the sale of its business.

[13] QEP’s decision not to recognise prior service except in relation to long service leave was clearly set out in the letters of engagement offered by QEP to the Employees. The Employees accepted employment on that basis and commenced work with QEP immediately after the cessation of their employment with PR Floors.

[14] In all of the circumstances, I have decided to vary PR Floor’s obligations to pay redundancy pay to the Employees. The amount of redundancy pay to which each of the Employees is entitled will be reduced to nil. The orders [PR606944] will take effect from 3 July 2018 which coincides with the end of the probationary period.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

<PR606943>

Annexure A

•  Ainsworth

•  Alderdice

•  Black

•  Paul Breen

•  Bull

•  Connor

•  Cullen

•  Duncan

•  Fitton

•  Freme

•  Hansen

•  Gerald Laurent

•  Mallett

•  Matthews

•  McKie

•  Mejia

•  Moody

•  Mounsey

•  Seale

•  Sharan

•  Smith

•  Sullivan

•  Thistleton

•  Turesson

•  Walton

•  Weir