Resha Yang and Secretary, Department of Education, Employment and Workplace Relations
[2012] AATA 241
•27 April 2012
[2012] AATA 241
Division GENERAL ADMINISTRATIVE DIVISION File Number
2011/4686
Re
Resha Yang
APPLICANT
And
Secretary, Department of Education, Employment and Workplace Relations
RESPONDENT
DECISION
Tribunal Ms N Bell, Senior Member
Date 27 April 2012 Place Sydney The decision under review is set aside and instead the Tribunal decides Ms Yang should be subject to an income maintenance period of 43 weeks commencing on 16 March 2011.
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Ms N Bell, Senior Member
CATCHWORDS
SOCIAL SECURITY – Newstart Allowance – income maintenance period – meaning of redundancy payment – decision under review set aside and substituted
LEGISLATION
Social Security Act 1991 (Cth), ss 1068-G7AH, 1068-G7AQ, 1068-G7AR, 1068-G7AM, 1068-G7AG, 1068-G7AKA
Social Security and Other Legislation Amendment Act 2011
Social Security and Other Legislation Amendment Bill 2011
CASES
Finch and Secretary, Department of Education, Employment and Workplace Relations [2009] AATA 745
REASONS FOR DECISION
Ms N Bell, Senior Member
27 April 2012
1.Ms Yang has many complaints about her former employer, Naked Truth Intimates Pty Ltd, a lingerie retailer, including underpayment and denial of sick leave and holiday pay. She took her complaints to Fair Work Australia after her employment was terminated in 25 January 2011. Ms Yang claimed Newstart Allowance on 28 January and, following a payment from her employer on 2 February of $1,056, described as two weeks’ payment in lieu of notice, Centrelink imposed an income maintenance period until 15 February 2011.
2.Subsequently Ms Yang settled her case at Fair Work Australia on 14 March 2011 for $24,000 gross, described by Ms Yang’s former employer in a separation certificate on 23 March as comprising annual leave of $14,784, redundancy pay of $8,160 and an additional two weeks’ pay in lieu of notice of $1,056.
3.On 27 May Centrelink decided to apply an income maintenance period from 2 February 2011 to 24 January 2012.
4.The Social Security Act 1991 (Cth) provides that when a person leaves his or her employment and receives a leave payment or a redundancy payment (“a termination payment”), then that payment is to be treated as ordinary income for a period equal to the period to which it relates – an income maintenance period (sections 1068-G7AH, 1068-G7AQ, 1068-G7AR of the Act). It follows that for the duration of an income maintenance period a person is not eligible to receive Newstart Allowance.
5.Ms Yang contends that no income maintenance period should be imposed because the settlement monies she received were for having been underpaid for years.
6.Section 1068-G7AM of the Act allows for all or part of an income maintenance period to not be applied if a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while an income maintenance period applies.
ISSUES
7.The issues before me are:
(i)whether an income maintenance period should be imposed on Ms Yang; and
(ii)if so, whether the period should be reduced.
SHOULD AN INCOME MAINTENANCE PERIOD BE IMPOSED?
The bulk of the $24,000 paid to Ms Yang on the settlement of her Fair Work Australia claim was described by her former employer as leave payments and redundancy payments. These are characterised as a termination payment by the Act and give rise to the imposition of an income maintenance period.
Ms Yang maintained that the payment was for having been paid at an under-award rate since she began her employment. She also maintained that she had never been given paid leave throughout her employment. I note that the employer described $14,784 of the monies paid to her as leave payments for 28 weeks.
Ms Yang pointed to the Deed of Release signed by her at settlement. It recites that her claim was for unfair dismissal and for having been “underpaid wages, … not paid annual leave and other shift allowances, in accordance with her entitlements under the General Retail Industry Award”.
Ms Yang also referred to a letter from her former solicitor, her representative before Fair Work Australia. The letter says:
We advise that we no longer hold the file for Ms Yang, as she requested it be referred to other solicitors.
From the limited information available from our electronic database and the memory of the solicitor for Ms Santone, who had carriage of the matter, we do recall that the component of Ms Yang’s settlement was to take into account that she had a claim for underpayment of wages with the Ombudsman.
As a result of the settlement, Ms Yang agreed to discontinue her Unfair Dismissal Claim at Fair Work Australia and withdraw her complaint with the Ombudsman.
It is not possible to distinguish what proportion of the monies payable to her were for the underpayment of wages, as negotiations were conducted on a global basis and not broken down into various components. Ms Yang submitted that since it is not possible to distinguish what proportion of the monies were payable for underpayment of wages, then the Employment Separation Certificate provided by the employer cannot be correct. Ms Yang also noted that the certificate makes no mention of underpayment of wages.
Ms Yang maintained that the employer had falsified its payroll records by recording fewer than the actual hours worked by her so as to present as if she had been paid at a higher hourly rate. Ms Yang purported to have records of the hours worked by her throughout her employment. However, all she had were incomplete records of takings for her shifts, signed by another person, which also appear to indicate a seven hour shift. In addition, she had printouts from an EFTPOS machine that indicate a “logon” time but do not record a “logoff” time or the length of her shift. These did not indicate the hours worked by her. Nor did Ms Yang have bank account records of any amounts paid to her. She said she was always paid in cash and did not deposit her pay in an account. She provided some tax assessments but these did not assist in any relevant way.
Ms Yang said she thought the settlement sum was in respect of unpaid wages only and signed the Deed of Release on that basis. She said she had only been shown the signature page of the Deed and that it was never explained to her by her solicitor. She said she was pressured to sign and has since lodged a complaint about her solicitor with the Legal Services Commissioner. She said her complaint was not successful.
There is some force in the argument that, if the settlement sum was negotiated on a global basis, then the Employment Separation Certificate which itemises the sum cannot be correct. However, this may have been the basis on which the employer calculated the amount it was prepared to settle for. It is the only evidence of that itemisation apart from Ms Yang’s insistence that it was solely for underpayment of wages. The settlement Deed itself undermines her position, reciting as it does a claim for unfair dismissal and unpaid leave. I have no evidence to support a finding contrary to the itemisation in the Employment Separation certificate.
On this basis, an income maintenance period must apply.
I note that the Employment Separation Certificate describes the following sums:
Type of leave Date paid/to be paid Gross amount $ Period covered (number of working days or weeks) Redundancy 16/3/11 $8160.00 In lieu of notice 02/02/11 $1056.00 2 weeks Annual leave 16/03/11 $14,784.00 28 weeks Other (In lieu of notice) 16/3/11 $1056.00 2 weeks
I note a gross weekly wage of $528 was indicated on the certificate.
The leave payment is described as representing 28 weeks payment for leave. The amount for redundancy does not refer to any period. The period must therefore be calculated by dividing the amount of the redundancy payment by the amount of Ms Yang’s gross weekly wage (s 1068-G7AG). This yields a period of 15.45 weeks, that is, 15 weeks rounded down to the nearest whole number. Together with the 28 weeks leave payment, that amounts to 43 weeks. There remain the four weeks of payments in lieu of notice.
No specific provision is made for payments in lieu of notice in the Act. The view has been taken by the Tribunal in some cases that the absence of specific provision means that payments in lieu of notice should not be considered termination payments and should not be included in the calculation of income maintenance periods. In Finch and Secretary, Department of Education, Employment and Workplace Relations [2009] AATA 745, Deputy President Jarvis said:
28. In ordinary parlance, it could be said that a payment in lieu of notice would be a termination payment, since such a payment is made at the time of, or as a consequence of, the termination of employment. However, the expression “termination payment” is defined in the Act, and in my opinion a payment in lieu of notice is not a “termination payment” within the meaning of the statutory definition. It was not a leave payment. …
29. The definition of “termination payment” in s 1068A-E12 also includes a redundancy payment. In my view, a payment in lieu of notice could not be said to be a redundancy payment, but is an entitlement arising under [a] contract of employment when […] employment is terminated, for any reason, with less than the agreed prior notice. However, a redundancy payment is a payment made by an employer in consequence of the redundancy of an employee, calculated by reference to a formula that is customarily dependent on the number of years of service of the employee who is being made redundant.
30. Whilst other paragraphs of Module E of s 1068A of the Act deem certain payments, such as leave payments, to be treated as income of the person receiving the payment for the period to which the payment relates (see for example s 1068A-E3), no such provision applies to payments in lieu of notice. As mentioned above, s 1068A-E4, which deems certain payments to be income for the period to which the payment relates, only applies where a person has received a “termination payment”. I consider that in the absence of any such deeming provision, a payment in lieu of notice should be treated as a payment of income paid to the person concerned on the day on which it was received.
The Secretary submitted that the passage through Parliament of the Social Security and Other Legislation Amendment Bill 2011, awaiting Assent, which inserts the words “includes a payment in lieu of notice” in section 1068-G7AQ, indicates that it is the intention of Parliament that the current provision should be interpreted to include payments in lieu of notice. Contrary to submissions made by the advocate of the Secretary, the Act in fact commenced on 30 November 2011. I note the transitional provisions in Schedule 6 provide that the amendment applies to termination payments made on or after the date of commencement. This excludes the payment made to Ms Yang on 16 March 2011. I consider, in line with the decision in Finch, that the words of the section as they were at the relevant time, did not bear an interpretation that payment in lieu of notice is a termination payment. If they did, no amendment would have been necessary.
It follows that the four weeks represented by the two amounts of payment in lieu of notice given to Ms Yang should not be part of an income maintenance period and the first income maintenance period of two weeks should not have been imposed. Rather, only one income maintenance period of 43 weeks should have been imposed. In accordance with section 1068-G7AKA the income maintenance period should commence on the day Ms Yang received her termination payment, that is, 16 March 2011.
SHOULD THE PERIOD BE REDUCED?
For the income maintenance period to be reduced pursuant to section 1068-G7AM, I must be satisfied that Ms Yang is or was in severe financial hardship because she incurred unavoidable or reasonable expenditure while an income maintenance period applied.
Ms Yang’s evidence was that she purchased a lawn monumental site at Macquarie Park Cemetery and Crematorium on 20 June 2011. Her initial evidence had been that she had spent her termination payment by repaying a loan from her sister. The monumental site cost $17,560. Ms Yang said she had feared she was so unwell she might die. She was unable to give any details of her condition, apart from a general complaint of headache, throat and chest pain, and produced no medical evidence. In the absence of evidence of terminal illness and reasonable apprehension of imminent death, I cannot conclude that the expenditure that she says caused her financial hardship was unavoidable or reasonable. She has raised no other cause of financial hardship. I note her evidence that she received some financial assistance from her former husband during the income maintenance period.
It follows that the period of income maintenance cannot be reduced.
DECISION
The decision under review is set aside and instead the Tribunal decides Ms Yang should be subject to an income maintenance period of 43 weeks commencing on 16 March 2011. I certify that the preceding 24 (twenty four) paragraphs are a true copy of the reasons for the decision herein of Ms N Bell, Senior Member.
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Associate
Dated 27 April 2012
Date of hearing 26 March 2012 Applicant In person Solicitors for the Respondent Mr G Lozynsky, Centrelink Program Litigation and Review Branch
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