The Trustee for Anvic & Riclyn Investment Trust T/A Sagey’s Spraying Services

[2015] FWC 5556

[2015] FWC 5556

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

The Trustee for Anvic & Riclyn Investment Trust T/A Sagey’s Spraying Services
(C2015/4075)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 13 AUGUST 2015

Variation of redundancy pay – employer cannot pay the amount – impending business closure.

[1] On 26 May 2015 The Trustee for Anvic & Riclyn Investment Trust T/A Sagey’s Spraying Services (Sagey’s) lodged an application pursuant to s.120 of the Fair Work Act 2009 (the FW Act). In this application Sagey’s sought to reduce to nil any redundancy payments due to its former employee, Mr Black. The application was initially made on the basis that Sagey’s asserted that it had obtained suitable alternative employment for Mr Black. Further, that Sagey’s was refinancing the business through personal cash injections from its owner, Mr Sage, such that it could not pay redundancy amounts.

[2] The application has been the subject of a number of telephone hearings which have involved Mr Sage and, generally, Mr Black.

[3] Section 120 of the FW Act States:

“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] There is no dispute that Sagey’s operated both spraying services but more particularly, various building services. In this regard it operated as Sagey’s Spraying Services and Sagey’s Construction. Mr Black was engaged under the terms of the Building and Construction General Award 2010. Sagey’s had now ceased to operate.

[5] The matter was initially adjourned to enable Mr Sage to obtain advice about the extent to which there was any redundancy obligation with respect to Mr Black who was the sole employee of Sagey’s.

[6] Mr Black disputed the extent to which Sagey’s had in fact obtained any alternative employment for him. He asserted that he had obtained that employment for himself.

[7] The matter was also adjourned to enable the parties to obtain advice about the application of the Fair Entitlements Guarantee Scheme.

[8] Whilst the parties provided various and conflicting information to me relative to the extent to which Sagey’s did or did not actually obtain suitable alternative employment for Mr Black, the more significant issue in this matter went to Sagey’s ability to make redundancy payments.

[9] On 4 July 2015 Sagey’s confirmed that the entity known as Sagey’s Spraying Services and Sagey’s Construction was no longer operating and that its PAYG Withholding Registration and GST Registration had been cancelled from 2 June 2015. In addition, Mr Sage advised that as the business did not have sufficient funds to pay some creditors, he was in the process of having his house re-valued so as to be able to personally borrow more money to meet those debts.

[10] Given this advice, which was supported by material provided by Sagey’s and was not disputed, I was satisfied that Sagey’s was unable to pay any redundancy entitlements due to Mr Black. The advice before me indicates that Sagey’s was currently utilising an overdraft facility of $60,000, that it was not trading and was in the process of being wound up. Sagey’s external accountants have provided confirmation of this winding up process.

[11] Section 120 of the FW Act establishes a discretion available to the Fair Work Commission in these circumstances. I have elected not to exercise that discretion because it seems to me that Sagey’s is, or is about to be, wound up in circumstances which may enable Mr Black to make a claim for payment of his redundancy entitlements through the Fair Entitlements Guarantee Scheme. I am concerned that an order to reduce to nil the redundancy entitlements otherwise due to Mr Black may affect his ability to make that claim. That is, if Mr Black’s redundancy entitlements are reduced to nil, he may not then have an entitlement to claim from the Fair Entitlements Guarantee Scheme.

[12] Absent that concern I am satisfied that the circumstances here would warrant an order for any redundancy payments due to Mr Black to be reduced to nil. Consequently, while I have decided to refuse this application for this reason, should Mr Black decide to pursue his redundancy claim against Sagey’s such that Sagey’s advise, within the next six months, that it seeks that this matter be re-opened, leave to that effect is reserved.

[13] An Order (PR570773) giving effect to this decision will be issued.

Appearances (by telephone):

R Sagey for The Trustee for Anvic & Riclyn Investment Trust T/A Sagey’s Spraying Services.

D Black on his own behalf.

Hearing details:

2015.

Adelaide:

June 6, 22

July 10

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<Price code A, PR570772>