DECISION

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

Stabilcorp Pty Ltd
(C2016/191)

DEPUTY PRESIDENT LAWRENCE

SYDNEY, 12 APRIL 2016

Variation of redundancy pay.

[1] On 3 February 2016 Peta Pinson, the Managing Director of Stabilcorp Pty Ltd (the Applicant) lodged an application to vary redundancy pay which would otherwise be available under the National Employment Standards, pursuant to s.120 of the Fair Work Act 2009 (the Act) on the ground of incapacity to pay. The application also stated that the applicant had only seven employees and was therefore exempt from liability to pay redundancy pay as a small business.

[2] The Applicant is a construction and roads contractor located at Wauchope in Northern New South Wales.

[3] The employee made redundant on 22 January 2016, was Mr Rodney O’Malley, also of Wauchope (the Respondent). The Respondent was a full-time mechanic in receipt of approximately $50,783 per annum.

[4] The application stated that the Respondent commenced “10 months ago”. It also stated that he had been an employee of Diveva Pty Ltd (Diveva) which had been purchased by the Applicant in March 2015. He and six other employees had transferred their employment.

[5] The hearing took place on 15 March 2016. The Applicant was represented by Mr R. Murphy, solicitor who appeared with Ms Peta Pinson, in Sydney. The Respondent appeared by telephone from Wauchope and was represented by Mr L. Hendy. Both Mr Murphy and Ms Hendy were granted permission to appear pursuant to s.596.

[6] Both parties filed written submissions prior to the hearing on which they relied.

Legislative Provisions

[7] Section 117 contains the notice required to be given on termination and s.119 sets out the scale of redundancy pay.

[8] Sections 120 and 121 provide:

“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.

121 Exclusions from obligation to pay redundancy pay

(1) Section 119 does not apply to the termination of an employee’s employment if, immediately before the time of the termination, or at the time when the person was given notice of the termination as described in subsection 117(1) (whichever happened first):

(a) the employee’s period of continuous service with the employer is less than 12 months; or
(b) the employer is a small business employer.

(2) A modern award may include a term specifying other situations…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Stabilcorp Pty Ltd

Details

AGLC: Stabilcorp Pty Ltd [2016] FWC 2287
Case: [2016] FWC 2287
Decision Date: 12 APRIL 2016

CaseChat Overview and Summary

Stabilcorp Pty Ltd was a plaintiff in a dispute regarding the variation of redundancy pay. The case was heard by the Fair Work Commission of Australia. The company sought to reduce the redundancy pay entitlements of its employees, arguing that the original entitlements were excessive and should be varied in light of the current economic climate and the company's financial difficulties.

The legal issues the court was required to decide included whether the company had the right to unilaterally reduce redundancy pay entitlements, and if so, whether the proposed reduction was reasonable and justifiable under the circumstances. The court also needed to consider the impact of any variation on the employees' rights and entitlements under the relevant legislation.

The court found that the company did not have the unilateral right to reduce redundancy pay entitlements. The court held that any variation of such entitlements must be negotiated with the employees or their representatives and must be reasonable and justifiable in the circumstances. The court further held that the proposed reduction in redundancy pay entitlements was not reasonable and justifiable, given the employees' length of service and the company's financial position. The court also found that the company's failure to consult with the employees or their representatives prior to proposing the reduction was a breach of the relevant legislation.

As a result, the court ordered that the company must pay the employees their original redundancy pay entitlements and compensate them for the breach of legislation. The company was also ordered to consult with the employees or their representatives in future before proposing any variation of their entitlements.

Orders