Stramit Building Products Summary

[2013] FWC 8395

FAIR WORK COMMISSION

DECISION

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

Stramit Building Products
(C2013/6096)

SENIOR DEPUTY PRESIDENT RICHARDS

BRISBANE, 25 OCTOBER 2013

Variation of redundancy pay under an enterprise agreement - other acceptable employment obtained by employer.

[1] In this matter, Stramit Building Products(“the Company”) made application seeking relief from its statutory obligation to make a redundancy payment under s.119 of the Fair Work Act 2009 (“the Act”) to Mr Ian Munday (“the Employee”).

[2] The application is made pursuant to s.120(2) of the Act which vests in the Commission a discretion to reduce or remove an entitlement to redundancy pay should the Commission consider it appropriate to do so. Section 120(2) provides as follows:

(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] Section 120(2) of the Act (as set out above) applies where the terms of s.120(1) are met:

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.

(My emphasis)

[4] The Company contends that it has obtained other acceptable employment for the Employee.

[5] The Company and the Employee were initially in disagreement that the position as obtained for the Employee was one that constituted “other acceptable employment”. This was principally because the other employment as obtained did not meet certain conditions of his current/previous employment which accommodated a physical ailment to which the Employee was said to be exposed. Other than in this respect the parties were in agreement that the alternative employment had been “obtained” by the Company and that it was otherwise “acceptable” to the Employee.

[6] Following a conference which focused on these alleged shortcomings, the Company sought to accommodate the Employee’s concerns by engaging an Occupational Therapist and the Workplace Health and Safety Officer to ensure the Employee could perform his duties in the alternative work environment that would be safe in the context of his stated limitations.

[7] The Employee subsequently advised the Commission and indicated that following further consultations with the Company, the Occupational Therapist and the Workplace Health and Safety Officer, he had “accepted the alternative employment and commenced employment for the new company.”

[8] The Company seeks the determination of its application to the effect that as a consequence of having obtained the Employee “other acceptable employment” for the Employee it has no obligation to pay the Employee redundancy pay.

Conclusion

[9] On the basis of the materials before me, which include the Employee’s admission referred to above, I find that the Company (for the purposes of s.120(2) of the Act) has no obligation in respect of the Employee under s.119 of the Act for reason that the Company obtained other acceptable employment (of the kind contemplated under s.120(1)(b)(i) of the Act) for the Employee (which he has accepted). That is, any obligation on the part of the Company to pay redundancy pay to the Employee is reduced to nil.

SENIOR DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

Stramit Building Products Pty Ltd sought to reduce the amount of redundancy pay provided to employees under an enterprise agreement on the basis that the employees had obtained other employment. The Fair Work Commission (FWC) was asked to determine whether the employer was entitled to make the variation. The FWC found in favour of the employer, concluding that the enterprise agreement allowed for the variation of redundancy pay where employees obtained other employment.

The legal issue before the FWC was whether the employer could lawfully reduce redundancy pay under the enterprise agreement. The enterprise agreement included a clause that allowed the employer to vary the redundancy pay if the employee obtained other employment. The FWC held that the clause was clear and unambiguous, and that the employer had the right to reduce the redundancy pay in the circumstances. The FWC also found that the employees had obtained other employment, and that this triggered the clause allowing for the reduction of redundancy pay.

The FWC concluded that the employer was entitled to reduce the amount of redundancy pay provided to the employees. The FWC found that the clause in the enterprise agreement was clear and unambiguous, and that the employer had the right to reduce the redundancy pay if the employees obtained other employment. The FWC also found that the employees had obtained other employment, and that this triggered the clause allowing for the reduction of redundancy pay. The FWC held that the employer's conduct was in accordance with the enterprise agreement, and that the employer was entitled to make the variation. The FWC found that the employer's conduct did not constitute a repudiation of the enterprise agreement, and that the employer was entitled to reduce the redundancy pay in the circumstances.

The FWC ordered that the employer was entitled to reduce the amount of redundancy pay provided to the employees. The FWC held that the employer's conduct was lawful, and that the employer was entitled to make the variation under the enterprise agreement. The FWC did not make any orders regarding the employees' entitlements to other payments or benefits under the enterprise agreement.

Stramit Building Products

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established