Southern Cross Ceramics Pty Ltd

[2013] FWC 1347

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Southern Cross Ceramics Pty Ltd
(C2013/2901)

COMMISSIONER GOOLEY

MELBOURNE, 5 MARCH 2013

Application to vary redundancy pay for other employment or incapacity to pay.

[1] Southern Cross Ceramics Pty Ltd (the Applicant), due to its financial position, has restructured its business and has been reducing the size of its workforce through a voluntary redundancy process. As a result of the downsizing, it was also necessary to reduce the hours of work of two of its more senior managers. As a result of this decision two full time positions are no longer required and the employees have been offered alternative part time positions.

[2] On 31 January 2013 the Applicant made an application pursuant to section 120 of the Fair Work Act 2009 (the Act) to have the redundancy pay payable to the two employees reduced.

[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.”

[4] The application and notice of listing were provided to the two employees affected by the application. Mr Ian Oglesby who appeared for the Applicant and who was also one of the employees affected, advised the Fair Work Commission that he and the other senior staff member supported the application.

[5] Mr Oglesby advised that an agreement had been reached with the two employees that they would accept an offer of alternative employment, namely they would be employed three days per week. Their terms and conditions of employment would not change other than their wages and entitlements would be paid on a pro rata basis.

[6] The Applicant seeks an order of the Fair Work Commission that the redundancy monies be paid to the two employees on a pro rata basis.

[7] Mr Jim Grant who was employed since 12 January 1998 would be entitled to 12 weeks redundancy pay. Mr Oglesby who was employed from 1 May 2000 would be entitled to 12 weeks redundancy pay. The employees worked 77.5 hours per fortnight. It is proposed that each employee be paid 186 hours redundancy pay. This would have the effect of paying the employees 0.4 of the redundancy monies payable under the National Employment Standards.

[8] The Applicant has proposed that the two employees’ notice, annual leave and long service leave would be paid out in the same manner.

[9] The Fair Work Commission does not have jurisdiction to adjust annual leave, notice or long service leave in these circumstances.

[10] I accept the Applicant’s submissions that, given the acceptance of the employees of the offer of part time employment and their proposal that the employees receive pro rata entitlements, that the offer of employment is acceptable alternative employment.

[11] An order [PR534503] to give effect to this decision will issue with this decision.

COMMISSIONER

Appearances:

Mr Ian Oglesby for the Applicant

Hearing details:

2012.

Melbourne.

19 February.

Printed by authority of the Commonwealth Government Printer

Southern Cross Ceramics Pty Ltd, an employer, applied to the Fair Work Commission to vary the calculation of redundancy pay owed to an employee who had been terminated. The dispute arose from the employee's prior employment with another company, which the employer argued should be considered in calculating the redundancy pay. The Fair Work Commission was tasked with determining whether the prior employment could be taken into account under the applicable legislative provisions.

The primary legal issue before the Commission was whether the prior employment of the employee could be considered when calculating the redundancy pay. This required an interpretation of the relevant sections of the Fair Work Act 2009. The Commission also needed to determine if the employer had valid grounds to seek a variation of the redundancy pay due to the employee's prior employment or any other reasons that might affect the employer's capacity to pay.

In its decision, the Commission noted that under the Fair Work Act, the calculation of redundancy pay generally considers the employee's continuous employment with the employer. However, it recognised that in certain circumstances, prior employment could be taken into account. The Commission examined the evidence provided by the employer regarding the employee's prior employment and the employer's financial situation. Ultimately, the Commission found that the employer had not provided sufficient evidence to justify a variation in the calculation of redundancy pay. The Commission concluded that the employer's financial situation did not constitute a valid reason to alter the redundancy pay owed.

The Fair Work Commission dismissed the employer's application to vary the redundancy pay. The employer was ordered to pay the employee the full amount of redundancy pay as initially calculated, without consideration of the prior employment or any claims of incapacity to pay.

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