Stonetraders Pty Ltd ATF Stonetraders Trust

[2014] FWC 6925

[2014] FWC 6925

FAIR WORK COMMISSION

DECISION

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

Stonetraders Pty Ltd ATF Stonetraders Trust
(C2014/4881)

COMMISSIONER CLOGHAN PERTH, 13 OCTOBER 2014

Variation of redundancy pay.

[1] On 11 June 2014, Stonetraders Pty Ltd ATF Stonetraders Trust (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 Leif Friberg (Mr Friberg or Employee) as a consequence of the Employer obtaining other acceptable employment.

RELEVANT BACKGROUND

[2] On 20 June 2009, the Employer employed all of the employees previously employed by Soiland Pty Ltd.

[3] Within six (6) months, the Employer found itself unable to provide sufficient work for all employees. Consequently, an arrangement was entered into by the Employer and another company, Urban Resources, in which Mr Friberg worked on a “labour hire” basis. In financial year 2010, Mr Friberg worked approximately 62% of his time with Urban Resources. By financial year 2012, Mr Friberg spent 99.46% of his working time with Urban Resources.

[4] On 28 June 2013, Mr Friberg’s employment was terminated for the reason of redundancy. Mr Friberg was advised that his employment would end immediately. Mr Friberg received his accrued entitlements and five (5) weeks pay in lieu of notice.

[5] On the same day, the Employer mistakenly forwarded to the Fair Work Ombudsman (FWO) an application to reduce the Employee’s redundancy entitlement.

[6] The Employer became aware of the application being mistakenly sent to the FWO in December 2013. On 11 December 2013, the Employer made application to the Commission (C2013/7642) in the same terms as this application.

[7] The application was listed for hearing on 21 January 2014. The Employer did not attend the hearing. Mr Friberg attended the Commission. Williams C dismissed the application on transcript and issued an order dismissing the application for want of prosecution (PR547047).

[8] Approximately five (5) months later on 11 June 2014, the Employer resubmitted this application which is a copy of its application on 28 June 2013.

[9] In my view, it is necessary in the first instance to determine whether the Commission should accept the application as it has already been dealt with by another member of the Commission and dismissed for want of prosecution. Secondly, if the application is properly made, whether, and to what extent (if any), Mr Friberg’s redundancy pay should be reduced on account of the Employer finding the Employee acceptable alternative employment.

RELEVANT STATUTORY FRAMEWORK

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

“119 Redundancy pay

Entitlement to redundancy pay

(1) An employee is entitled to be paid redundancy pay by the employer if the employee’s employment is terminated:

(a) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or

(b) because of the insolvency or bankruptcy of the employer.

Note: Sections 121, 122 and 123 describe situations in which the employee does not have this entitlement.

Amount of redundancy pay

(2) The amount of the redundancy pay equals the total amount payable to the employee for the redundancy pay period worked out using the following table at the employee’s base rate of pay for his or her ordinary hours of work:

Redundancy pay period
Employee’s period of continuous service with the employer on termination	Redundancy pay period
1	At least 1 year but less than 2 years	4 weeks
2	At least 2 years but less than 3 years	6 weeks
3	At least 3 years but less than 4 years	7 weeks
4	At least 4 years but less than 5 years	8 weeks
5	At least 5 years but less than 6 years	10 weeks
6	At least 6 years but less than 7 years	11 weeks
7	At least 7 years but less than 8 years	13 weeks
8	At least 8 years but less than 9 years	14 weeks
9	At least 9 years but less than 10 years	16 weeks
10	At least 10 years	12 weeks

[11] 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.”

(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.”

CONSIDERATION AND CONCLUSION

[12] The first issue is whether the Commission should accept this application as it has already, in identical terms, been dealt with by another member of the Commission and dismissed for want of prosecution.

[13] There is no statutory timeline when an application pursuant to s.120(2) of the FW Act should be made, although the scheme of the FW Act appears to indicate that an application for variation to redundancy pay should take place at least prior to termination of employment.

[14] The circumstances of this application are that a purported application was made on the day Mr Friberg was given notice that his position was made redundant. The purposed application was made to FWO.

[15] Approximately six (6) months later, the application was properly made to the Commission, and as it so happens, was dismissed for want of prosecution because of non attendance by the Employer. However, the important matter to note is that the application was dealt with by the Commission.

[16] Approximately five (5) months later, the Employer has now made this same identical application to the Commission.

[17] It is not appropriate to speculate on what might have happened if the application was filed properly in the Commission in the first instance. The Employee has not contested that the Employer obtained other employment which Mr Friberg has carried out at increasing levels over the past three (3) years.

[18] It appears that Mr Friberg is relying, in the first instance, that, at the time of his termination of employment, there had been no variation to his redundancy pay and consequently he was entitled to an amount of 12 weeks. Secondly, Mr Friberg is relying on the decision of Williams C, when the Employer’s application was dismissed for want of prosecution.

[19] The circumstances show a series of errors - none of which can be attributed to Mr Friberg.

[20] Subsection 120(2) of the FW Act gives the Commission the discretion to reduce the amount of redundancy to a specified amount (which may be nil).

[21] To assist in an understanding of s.119 of the FW Act, I have referred to the Fair Work Bill 2008, Explanatory Memorandum.

[22] Paragraph 471 of the Explanatory Memorandum is entitled Subdivision B - Redundancy Pay and reads:

“471. This Subdivision sets out the circumstances in which an employee is entitled to redundancy pay upon termination of their employment.”

[23] With reference to Redundancy Pay, the Explanatory Memorandum provides at paragraph 472, the following:

“Subclause 119(1) [of the FW Act] entitles an employee to redundancy pay from their employer where employment is terminated.”

[24] Under the exclusions from the obligation to pay redundancy pay, paragraph 475 of the Explanatory Memorandum reads:

“Clause 121 [of the FW Act] provides that the entitlement to redundancy pay under clause 119 does not apply where immediately before termination, or at the time when notice of termination was given as required...” (my emphasis).

[25] At the time of his dismissal for the reason of redundancy, Mr Friberg had completed 19 years of service. Consequently, he was entitled to receive 12 weeks redundancy pay in accordance with subsection 119(2) of the FW Act.

[26] The scheme of the FW Act sets out that an employee’s entitlement to redundancy pay is upon termination of employment. As at 28 June 2013, the date that Mr Friberg was given notice of dismissal for reason of redundancy, the Employer did not have a determination pursuant to s.120(2) of the FW Act which may have varied (if it was varied), the 12 week redundancy pay due to Mr Friberg.

[27] The fact that the Employer had purportedly made an application to the Commission may have been a valid reason not to pay the 12 weeks’ redundancy pay upon termination of Mr Friberg’s employment. However, the simple fact is that the Employer directed the application to the wrong jurisdiction and that was through no fault of Mr Friberg. The delay in remedying the error was significant.

[28] Having realised its error, the Employer rectified its mistake and filed an application in the Commission. However, when the matter was set down for hearing, the Employer failed to attend and the application was dismissed, for want of prosecution, by Williams C.

[29] Commissioner Williams, having not made a determination to vary Mr Friberg’s entitlement to redundancy pay, notwithstanding the delay, he was now entitled to his 12 weeks’ redundancy pay on or about 21 January 2014; this was the date of the Order to dismiss the Employer’s application.

[30] This application, which is in the same terms as the application before Williams C, is essentially seeking a review of the earlier decision by Commissioner Williams to dismiss the application for want of prosecution.

[31] The phrase, “third time lucky” unfortunately for the Employer is not going to work on this occasion.

[32] For good reasons, the Parliament has provided, in the FW Act, for employees whose positions have been made redundant, redundancy pay. For good reasons, the Parliament has also provided procedures in the FW Act for employers to be able to have that redundancy pay varied. In this case, the Employer has failed, through no fault of Mr Friberg, to exercise the procedural requirements to vary his statutory redundancy entitlements with diligence.

[33] The FW Act provides a presumption of redundancy pay for an employee who has been made redundant. Any variation to that redundancy pay has to be acted upon by the Employer with due respect for the available procedures in the FW Act. Unfortunately, on this occasion, the Employer has not attended to its procedural entitlements as it should have.

[34] To be fair to the Employer, in closing the hearing, it made the following submissions:

“MR LAURIER: I guess I want to clarify this has never been trying to get at Leif [Mr Friberg]. This has always been an application to find out whether we have done the correct thing in making sure he had a job, making sure he had continuous work, giving him the extra five weeks pay in lieu of service instead of letting him work it off and then making him redundant. And we feel we have done everything we can to make sure he is ahead. I suppose that's about it, sir. We just wanted to clarify have we done the right thing, or have we not.” 1

“MR LAURIER: It's a legislation. If it wasn't there, he would have got paid. Simple. Like I said, this has never been a dispute of trying to not pay Leif, it is a confirmation from the Commission whether we have done the right thing, whether we can get a reduction.” 2

CONCLUSION

[35] For the above reasons, I am of the view that it is inappropriate for the Commission, as presently constituted, to reconsider the Order of Williams C of 21 January 2014 to dismiss the application for want of prosecution.

[36] Mr Friberg was entitled to 12 weeks’ redundancy pay as at the time of his termination of employment. There has been no variation by the Commission pursuant to s.120 of the FW Act to that entitlement.

[37] This application is dismissed and an Order issued jointly with this Decision.

COMMISSIONER

Appearances:

P Laurier on behalf of the Employer.

L Friberg, the Employee.

Hearing details:

2014:

Perth,

30 September

 1   Transcript PN121

 2   Transcript PN125

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