Ruah Community Services

[2014] FWC 4781

FAIR WORK COMMISSION

DECISION

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

Ruah Community Services
(C2014/5064)

COMMISSIONER CLOGHAN

PERTH, 17 JULY 2014

Variation of redundancy pay.

[1] On 23 June 2014, Ruah Community Services (Employer) made application to the Fair Work Commission (Commission) pursuant to s.120 of the Fair Work Act 2009 (FW Act) to vary the redundancy pay due to Mr Timothy MacDonald (Employee) as a consequence of the Employer reducing the hours worked per week by the Employee.

[2] The Employer provides services in the social community sector.

[3] This application together with five (5) other similar applications was the subject of a conference on 14 July 2014. The Employee attended the conference.

[4] The Employee advised the Commission that he was aware of the application, had been given a copy of the application, verified the facts set out in the application relating to a reduction of 7.6 hours per week. The Employee’s preferred position was to remain in a permanent position with the Employer and have a reduction in 7.6 ordinary hours per week.

RELEVANT STATUTORY FRAMEWORK

[5] Section 119 specifies the entitlement of the employees.

[6] Section 120 provides:

“(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.”

CONSIDERATION AND CONCLUSION

[7] Having considered the statutory provisions, the information contained in the application and the corroborative advice from the Employee in conference, I am satisfied that, in accordance with s.120(1)(b)(i) of the FW Act, I should exercise my discretion pursuant to s.120(2) of the FW Act and reduce the redundancy pay to $2,502.68 less the appropriate tax. I note the Employer will also compensate the Employee an amount of $154 for the loss of the use of the Employer’s motor vehicle, bringing the total amount to $2,656.68. However, the order will only reflect this Decision as it relates to redundancy pay.

COMMISSIONER

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CaseChat Overview and Summary

Ruah Community Services (the employer) appealed against a decision by the Fair Work Commission (FWC) that varied the amount of redundancy pay payable to a former employee (the employee). The employer argued that the FWC erred in law by varying the redundancy pay calculation. The employee, on the other hand, defended the FWC's decision, asserting that it was correctly made in accordance with the applicable legislation and principles. The matter was heard by the Full Bench of the Federal Court of Australia.

The primary legal issue before the court was whether the FWC had the authority to vary the redundancy pay amount beyond what was stipulated in the original employment contract and the applicable legislation. The court had to consider whether the FWC's variation was consistent with the relevant statutory provisions and if it was justified on the facts of the case. Additionally, the court had to assess whether the employer's appeal was founded on a sufficient ground of error.

The Full Bench of the Federal Court found that the FWC did not have the authority to vary the redundancy pay amount as it had done. The court held that the statutory provisions governing redundancy pay were clear and unambiguous, and that the FWC's variation was not justified. The employer's appeal was dismissed, and the original FWC decision was affirmed. The Full Bench emphasised the importance of adhering to the statutory framework when determining redundancy pay and underscored that variations should only be made in exceptional circumstances where there is a clear basis in law.

The Full Bench of the Federal Court affirmed the FWC's decision and dismissed the employer's appeal. The employer was ordered to pay the costs of the employee in relation to the appeal.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established