Protop Australia Pty Ltd T/A Protop Australia Pty Ltd v Jer Yang

[2014] FWC 5424

[2014] FWC 5424

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Protop Australia Pty Ltd T/A Protop Australia Pty Ltd
v
Jer Yang and Ors
(C2014/5170)

DEPUTY PRESIDENT GOSTENCNIK MELBOURNE, 11 AUGUST 2014

Variation of redundancy pay.

Introduction

[1] Until 30 June 2014 Protop (Australia) Pty Ltd (Applicant) operated a business in the textile industry involving the production of garments and screen printing. The business has operated for some 30 years. As at 30 June 2014 the Applicant employed 35 employees in its business in various capacities. Two of the employees were casual employees and eight of the employees were employees who as at 30 June 2014 had been employed for a period of less than 12 months.

[2] For some time prior to 30 June 2014 the Applicant sought out potential purchasers of its business. Ultimately it was able to negotiate and execute the sale agreement for the business with Eandl Group Pty Ltd (Purchaser). The date of settlement for the sale was 30 June 2014.

[3] The Applicant has applied for an order under s. 120 of the Fair Work Act 2009 (Act) for a variation of its obligation to make redundancy payments to its former employees and that the varied obligation should be nil. The application is made on the basis that the Applicant obtained other acceptable employment for the employees who are the subject of the application and further that it cannot pay any amount of redundancy pay to those employees.

[4] On 6 August 2014 I made an order varying the redundancy pay that was otherwise due to 23 former employees of the Applicant by reducing the amount to nil. These are my reasons for making the order.

Relevant factual background

[5] The application is made in respect of 23 former employees of the Applicant. Each of the 23 former employees was given notice of the application made by the Applicant, was given a copy of the material filed by the Applicant pursuant to earlier directions that I made for the conduct of this matter, and was given an opportunity to file any material in response or opposition to the application. None of the 23 former employees filed any material nor did any such employee give notice that they wished to be heard on the application. Consequently I decided to deal with the matter on the papers. The Applicant filed an affidavit of Amanda Ruth Gill who is the widow and executor of the director of the Applicant. I accept as uncontested evidence in these proceedings the matters to which Ms Gill has deposed and which are contained in that affidavit. Some of these matters are rehearsed below.

[6] The sale agreement required the Purchaser to give notice to the Applicant before the settlement date of the names of the employees of the Applicant to whom the Purchaser will offer employment in the business after acquisition, and then to promptly make such an offer. The sale agreement required that any offer of employment that was made to an existing employee of the Applicant was to be on terms and conditions that are no less favourable to that employee than the terms and conditions of employment of that employee with the Applicant.

[7] The Applicant facilitated the obtaining of employment of most of its workforce with the Purchaser. It did this by ensuring that the Purchaser of the business purchased the business as a going concern. It gave the Purchaser access to the business during working hours to interview its employees for possible employment with the Purchaser. It allowed the Purchaser capacity to directly observe the work performed by its employees over a five month period prior to the settlement date. It also gave the Purchaser access to employee’s personnel files.

[8] All but one of the employees of the Applicant was offered employment with the Purchaser. Each employee who was offered employment accepted employment of the Purchaser. However the Purchaser did not recognise the service with the Applicant of the employees to whom it offered employment for the purposes of calculating any future redundancy entitlement that might arise.

[9] It is apparent from the material attached to the affidavit of Ms Gill that the employees who are the subject of this application were offered and commenced employment with the Purchaser on terms and conditions which are no less favourable than those they enjoyed in employment with the Applicant, and is in the same position as that which pertained whilst the employees were employed with the Applicant. The employees performed work in the same location.

[10] Prior to the settlement date all employees of the Applicant were advised that their employment with the Applicant would end with effect on 30 June 2014. Thereafter each employee who had accepted employment with the Purchaser was paid outstanding wages, an amount representing payment in lieu of notice of termination, and amounts for untaken annual leave and any long service leave entitlement. The employee who was not offered employment with the Purchaser received on termination of that employee’s employment payments representing the aforementioned matters as well as a payment representing that employee’s redundancy entitlement under the National Employment Standards.

[11] The liability to make redundancy payments to the 23 employees the subject of this application is in the amount of $162,794.42. The Applicant has ceased trading and is in the process of winding up. The Applicant does not appear to have any fixed assets and based on a comparative trial balance reflecting the Applicant’s financial position as at 31 July 2014 it would appear the Applicant is in a net loss position in excess of $300,000.

Consideration and conclusion

[12] It seems to me having regard to the undisputed matters to which I refer above, that the Applicant obtained other acceptable employment for the 23 former employees subject of this application with the Purchaser. It is apparent that the Applicant by purpose and effort established an opportunity for employment which suited each of the former employees and by reason of the offer of employment made by the Purchaser crystallised as alternative employment which is of a kind that is acceptable within the meaning of s. 120(1)(b)(i). Ultimately it was the Applicant’s negotiation of the contract of sale and subsequent steps to facilitate access to and interview of its employees by the Purchaser that resulted in acceptable alternative employment becoming available to the 23 former employees subject of its application. The Applicant did not simply act passively, rather it was a strong moving force in the creation of the opportunity for employment that became available to these employees.

[13] Furthermore I am satisfied that based on the financial position of the Applicant, it is in no position to make any payment to the 23 employees the subject of this application.

[14] In the circumstances of this case there do not appear to be any other factors which might weigh against the exercise of my discretion to make the order sought. I am therefore satisfied that both the circumstances set out in s. 120(1) are made out and I see no other reason why my discretion under s.120(2) should not be exercised and I do so. The application to vary the Applicant’s obligations to make redundancy payments to the 23 employees the subject of this application is granted. The amount of redundancy pay to which each of the 23 employees the subject of this application is entitled is reduced to nil.

[15] An order to this effect has already been issued in PR554001.

DEPUTY PRESIDENT

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