The Trustee for Manesh & Jassar Unit Trust T/A Freight For You

[2020] FWC 4160

[2020] FWC 4160

FAIR WORK COMMISSION

DECISION

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

The Trustee for Manesh & Jassar Unit Trust T/A Freight For You
(C2020/4357, C2020/4358, C2020/4359, C2020/4360, C2020/4361, C2020/4362, C2020/4363, C2020/4364, C2020/5198)

COMMISSIONER HUNT BRISBANE, 24 AUGUST 2020

Variation of redundancy pay – multiple applications - whether applications validly made – applications not made by employer – alternative consideration that neither s.120(1)(b)(i) or (ii) could be found to have been met – applications dismissed.

[1] The Trustee for Manesh & Jassar Unit Trust T/A Freight For You (the Applicant) has made nine applications under s.120 of the Fair Work Act 2009 (the Act) to have the Fair Work Commission (the Commission) vary the redundancy entitlements of nine former employees of the company whose employment has, the Applicant states, ended for reason of redundancy.

[2] The applications were made in respect of the following employees:

Name	Complete years of service	Weeks of redundancy	Amount	Correction
Adam Perrett	1 year	4 weeks	$3,217.84
Bradley Fletcher	4 years	7 weeks	$5,631.22	Should be 8 weeks = $6,435.68
Benjamin Ware	7 years	13 weeks	$10,774.14
Gregory Turner	2 years	6 weeks	$5,038.80	Should be 3 years = 7 weeks = $5,878.60
Hayden McCormack	1 year	4 weeks	$3,217.84
John Takai	2 years	4 weeks	$3,217.84	Should be 6 weeks = $4,826.76
Portlynn Holzheimer	13 years	12 weeks	$13,848.72
Trevor Kirkham	7 years	13 weeks	$10,457.98
Phillip Reay	9 years, 11 months	16 weeks	$13,029.44
Total	$71,687.00

[3] The Applicant seeks to have the Commission reduce these entitlements to nil on the basis that it cannot pay the amounts, as contemplated by s.120(1)(b)(ii) of the Act. As the proceedings continued, the Applicant sought to amend the applications to also claim that it obtained other acceptable employment for at least some of the employees, as contemplated by s.120(1)(b)(i) of the Act.

Framework

[4] Section 120 of the Act confers on the Commission a discretion to reduce the amount of redundancy pay to which an employee would otherwise have been entitled under s.119 of the Act. Section 120(1) states that the section applies if an employee is entitled to be paid an amount of redundancy pay under s.119, and (relevantly) the employer (i) obtains other acceptable employment for the employee (s.120(1)(b)(i)); or (ii) cannot pay the amount (s.120(1)(b)(ii)). These are the jurisdictional facts that must be established before the Commission may exercise its discretion to vary redundancy pay. Section 120(2) then states that the Commission ‘may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that the FWC considers appropriate’. If the Commission makes an order under s.120(2), the amount of redundancy pay to which the employee is entitled is the reduced amount specified in the determination (see s.120(3)).

[5] The Applicant contended that the key questions for consideration in these applications are whether the Applicant cannot pay the amounts to each of the respondent employees, or if it obtained other acceptable employment for some of the respondent employees. If either of these matters have been met, the Applicant submitted that I should exercise my discretion to reduce the amounts owed to the respondent employees.

Hearings

[6] I convened two hearings to hear evidence of the Applicant and of each of the respondent employees. The first was on 17 July 2020 and the second on 4 August 2020. The employment of the majority of the employee respondents was not due to end until around 7 August 2020; accordingly, I commend the Applicant for bringing the applications well in advance of the employment ceasing.

[7] Mr Rajkaran (Raj) Duggal, Director appeared for the Applicant. Ms Margarita Cerrato, Senior Industrial Officer of the Transport Workers’ Union (the TWU) appeared on behalf of members Ms Holzeimer and Mr Ware. All other employee respondents appeared on their own behalf.

Uncertainty as to correct employer

[8] The TWU, on behalf of its members highlighted that the s.120 applications had been made by the Trustee for Manesh & Jassar Unit Trust T/A Freight For You, with an ABN of 74 491 528 116. This entity is a fixed unit trust.

[9] The payslips of employees demonstrate that they have been, since around September 2019, paid by an entity with an ABN of 98 962 341 372. A payslip of Mr Ware, produced in evidence provides for that particular ABN in the top right corner of the payslip, with a logo of Freight For You in the left-hand corner.

[10] The TWU provided evidence of an ABN lookup for that particular ABN, demonstrating it belongs to The Trustee for Melbourne Classic which is a discretionary trading trust. Mr Ware attested to not understanding the relationship between the Applicant and The Trustee for Melbourne Classic.

[11] Following the first hearing and prior to the second hearing, Mr Duggal filed evidence on behalf of the Applicant to attempt to explain the relationship between the entities. A service agreement was accepted into evidence. It was made on 15 September 2019 between Vortac Pty Ltd as Trustee for Manesh & Jassar Unit Trust T/A Freight For You (ABN 74 491 528 116) on one part, and Inderjit Singh as Trustee for Melbourne Classic (ABN 98 962 341 372) on the other part.

[12] The service agreement is as follows and was executed by the below signatories:

“Whereas Vortac Pty Ltd as Trustee for Manesh & Jassar Unit Trust T/A Freight For You is a Transport Company specialised in Freight Delivery System.

Whereas Inderjit Singh ATF Melbourne Classic is a Workforce Provider specialised in Labour Consulting Service.

1. Both parties agree that from 15^th September 2019, Melbourne Classic will take over the responsibility handling all employees’ salaries on a weekly basis.

2. Manesh & Jassar Unit Trust will continue to be responsible for all past and future employee entitlements as per the National Employment Standards.

3. Vortac Pty Ltd will continue to handle all HR matters relating to Freight For You employees.

…………………………..   …………………………….

Rajkaran Singh Duggal   Inderjit Singh

Vortac Pty Ltd ATF Manesh & Jassar Unit Trust           Inderjit Singh ATF Melbourne Classic”

[13] During the hearing on 4 August 2020, Mr Duggal explained that while Inderjit Singh ATF Melbourne Classic became the employer of relevant employees in September 2019, all employee entitlements are guaranteed and underwritten by the Applicant.

[14] There was much discussion during the second hearing on this issue. I understand Mr Duggal’s evidence to be:

(a) The Applicant recently lost its major contract, being a StarTrack contract to deliver to the various regions. The loss of this work constitutes about 90% of its typical work and without the StarTrack contract, there is little to no work for its permanent and casual truck drivers to perform;

(b) The Applicant has a strong desire not to go into administration or liquidation, and it wishes to pay to all of its employees and to other creditors all of their entitlements;

(c) Notwithstanding the employment of the employees is with Inderjt Singh as Trustee for Melbourne Classic, the Applicant has agreed to underwrite and be responsible for all employment costs, including annual and long service leave accruals, superannuation and any other costs associated with the termination of employees;

(d) The Applicant has been attempting to borrow large sums of money from the money market to cover all employee entitlements, however this has been relatively unsuccessful as money markets are not generously loaning at this moment in time; and

(e) The relevant employees have been loyal and hard-working and Mr Duggal, in particular, wishes for the employees to understand that the Applicant wants to meet all of its obligations rather than go into administration or liquidation. It wishes to maintain its good name in the community.

[15] I questioned Mr Duggal as to which entity meets the wages and superannuation obligations of Inderjit Singh as Trustee for Melbourne Classic (Melbourne Classic). He answered that the Applicant moves money from its accounts to the accounts of Melbourne Classic, and Melbourne Classic then makes the relevant payments.

[16] The TWU submitted that Melbourne Classic is, as a matter of fact, the employer of the employees. Wages are paid to employees from this entity, superannuation is paid into superannuation accounts from this entity, taxation is remitted from this entity and the entity’s ABN is on employees’ pay slips.

[17] After the first hearing, the Applicant provided some financial records of the Applicant to support its claim that it is unable to meet the redundancy obligations it asserts that it is required to meet. The financial records are not audited. No financial records of Melbourne Classic were provided for the Commission’s consideration. Mr Duggal stated that the records were either not available, or would not demonstrate any material information, given no assets were held by Melbourne Classic, and simply, money was moved from the Applicant to Melbourne Classic in order for Melbourne Classic to pay wages, superannuation and remit taxation to the ATO.

Consideration

[18] On the evidence before me, the Applicant in these proceedings is not the employer of the nine employees. The employer is Melbourne Classic, and pursuant to s.120(2), only “the employer” may make application to the Commission for consideration to reduce redundancy pay owed to employees to nil or some other amount.

[19] While I consider it noble for the Applicant to underwrite Melbourne Classic’s obligations to its employees, it is ultimately Melbourne Classic’s responsibility to pay to its employees their entitlements on termination.

[20] There is no information before the Commission relevant to Melbourne Classic’s financial position.

[21] I determine that the applications have not been validly made as only the employer of the nine employees may bring an application. There is no jurisdiction to determine the matters other than to dismiss the applications.

Alternative consideration

The Applicant claims it cannot pay the amount

[22] Although it is not necessary to do so, in the event the Commission was tasked with determining if the Applicant cannot pay the amount of redundancy to the nine respondent employees, having examined the unaudited balance sheet of the Applicant, I would not find that it is unable to pay the amount of redundancy.

[23] Whilst I consider it honourable for Mr Duggal to, on behalf of the Applicant, underwrite monies for Melbourne Classic to pay termination, redundancy and superannuation payments for its employees, rather than allow Melbourne Classic or the Applicant to go into administration or be liquidated, Mr Duggal has sought to prioritise the payment of outstanding superannuation to as many as 20 employees over the obligation of Melbourne Classic to pay redundancy to the nine respondent employees.

[24] On the information before me, it cannot be said that the Applicant cannot pay the amount (if it were required to, when I have determined that it is Melbourne Classic’s obligation); rather, the Applicant wishes to make the payment of redundancy entitlements a lower obligation than the payment to the ATO of superannuation payments for all of the relevant employees (of Melbourne Classic) and other debts owed by the Applicant. I am informed that the superannuation payments of the respondent employees have now been met, and other employees’ superannuation payments remain outstanding.

[25] There is no information that would assist with why it would be necessary to prioritise other debts such as trade creditors, insurance premium funding, GST and fuel tax credit liabilities over and above the approximate $72,000 of redundancy payments detailed at [2].

[26] A relevant consideration, if it were necessary, would also be the potential effect of an order under s.120 of the Act on an employee’s ability to make a claim under the Fair Entitlements Guarantee (FEG) scheme if the relevant employer was wound up. If an order was made by the Commission to reduce the respondent employees’ entitlements to nil, and then the relevant employer was wound up, under the scheme the employees would not be able to receive severance payments on account of the Commission’s order. That would seem unnecessarily harsh in the present circumstances.

Did the employer obtain other acceptable employment for the employee?

[27] Mr Duggal’s evidence is that on the Applicant learning of the loss of the StarTrack contract, some effort was made to make connections between the employees and other businesses. Another contract carrier, Murdoch Road Transport (Murdoch) is a competitor of the Applicant. It has secured the StarTrack work in the various regions. The Applicant provided a Murdoch flyer to employees from Mr John Murdoch, Managing Director which states:

“I would like to take this opportunity to open the lines of communication.

Murdoch Transport will be requiring drivers, depot and office staff to perform the roles currently being performed by Freight For You staff and welcome the opportunity to open the lines of communication to carry on in your current roles for Murdoch Transport.

As you are aware our commencement date is Monday the 10^th of August and to have better understanding of current roles and our employment criteria I would encourage you to contact myself by Friday 10^th of July via email with your name, phone number and current roles and delivery area so we can arrange a time to meet and discuss employment.”

[28] At the second hearing there was discussion as to another entity, Rocktrans, which is embedded in the Applicant’s workplace. It took a great deal of questioning from me to Mr Duggal to try and understand the relationship between Rocktrans and the Applicant and Melbourne Classic.

[29] Mr Duggal explained that Rocktrans is owned by “Manesh” and “Jassar”, the same unit holders of the Applicant. Some of the respondent employees were offered employment by this entity. A copy of the letter provided to Mr Fletcher dated 8 July 2020 was admitted into evidence. It is reproduced below:

“Dear Brad Fletcher,

After careful consideration we would like to offer you Permanent employment with Rocktrans to fill the position of Delivery Driver – Performing various freight deliveries in the Atherton / Cairns region.

The permanent position would attract a base rate of $24.54 per hour and $46.80 double time which is based on the Grade 2 rate in the Rocktrans Certified Agreement.

Under the agreement there is a 3 month probationary period to assess your suitability for the role.

As part of your employment with Rocktrans a medical, Criminal history, Pre-employment Drug & Alcohol Test, 5 year driver history from the Department of Transport will need to be provided for you to be considered for the role.

All training and relevant paperwork is required to be completed as soon as possible. Please indicate at your earliest convenience in writing your intentions regarding this position as we would need to pursue other options to fill this position.

Any questions please don’t hesitate to contact me to discuss.

Regards

Shane Kennedy
Operations Supervisor”

[30] The letter is branded “Rocktrans” and also includes “Jassar & Manesh Pty Ltd ABN 72994133502”. I understand that the business is Jassar & Manesh Pty Ltd trading as Rocktrans (Rocktrans).

[31] In answering questions from me, Mr Duggal stated that he has no affiliation with Rocktrans or the entity Jassar & Manesh Pty Ltd, however the same owners of that entity, are the same unit holders within the Applicant, Mr Jassar and Mr Manesh. It is also noted that Mr Shane Kennedy, Operations Supervisor of Rocktrans is the author of the letters terminating the employee respondents’ employment.

[32] I suggested to Mr Duggal at the second hearing that in the event Mr Jassar and Mr Manesh are unit holders of the Applicant and owners of Rocktrans it could be possible that there has been a transfer of business pursuant to s.311 of the Act. It is not clear, nor is it necessary for me to conclude if that is so, especially when there now appears to be three entities involved;

(a) Vortac Pty Ltd ATF The Trustee for Manesh & Jassar Unit Trust T/A Freight For You; then

(b) Inderjit Singh ATF Melbourne Classic; then

(c) Jassar & Manesh Pty Ltd trading as Rocktrans.

[33] If it were necessary to determine if the Applicant had obtained other acceptable employment for the employees, an examination of each of the entities and persons responsible for the entities would need to be undertaken. Mr Duggal’s evidence is that he doesn’t have any relationship with Rocktrans, but might Mr Manesh and Mr Jassar be able to satisfy the associated entity test at s.311(6)? It is not necessary to answer this question in this decision, and it is also not clear who has relevant control over Melbourne Classic, given its intervening status as the employer between September 2019 and August 2020.

Mr Fletcher

[34] Mr Fletcher stated during the second hearing that he was approached by Mr Kennedy to join Rocktrans. He chose to join Rocktrans and he is uncertain whether his employment entitlements from Melbourne Classic have flowed to his employment with Rocktrans, including accrued sick leave and continuous service. Mr Duggal stated that while he has nothing to do with Rocktrans, he assumes that Mr Fletcher’s entitlements have been carried over. He does not, however, know this to be the case.

Mr Perrett

[35] Mr Perrett stated during the second hearing that Mr Kennedy offered work with Rocktrans for him to perform which he declined. Mr Perrett had already secured an offer to work with Murdoch. He wished to perform the same work, including the same delivery route. Mr Perrett stated that Mr Kennedy approached him one morning at 7:30am and asked him to provide an answer later that day if he wished to join Rocktrans. Mr Perrett informed Mr Kennedy later that day that he was declining the offer. Mr Perrett has not ever spoken with Mr Duggal.

Mr Turner

[36] Mr Turner stated during the second hearing that Mr Kennedy offered work with Rocktrans for him to perform which he declined. He is aged over 60 years old and he was deciding what he wished to do.

Mr Ware

[37] Mr Ware stated during the second hearing that he found work with Murdoch and was due to commence very shortly. The work is casual for approximately six months.

[38] On Mr Ware’s behalf, Mr Veritz of the TWU stated that anecdotally TWU members had stated that some employees of Rocktrans had not been paid superannuation, and accordingly other members did not wish to work for Rocktrans for fear of not having their superannuation paid into their accounts.

Ms Holzheimer

[39] Ms Holzheimer stated during the second hearing that she approached Murdoch to secure future work which is guaranteed as casual employment only.

Mr Takai

[40] Mr Takai stated during the second hearing that he had been made redundant as at 9 June 2020. He had not been offered work from any organisation and he has been without work for two months. Mr Takai only received two weeks’ notice of termination, and he is entitled to a further one week on account of his length of service and being 45 years or older.

Mr Reay

[41] Mr Reay stated during the second hearing that his employment was due to end on 8 August 2020. He approached Murdoch where the employment is promised as six months as a casual employee. He further stated that Mr Kennedy is both the General Manager for the Applicant and for Rocktrans.

Consideration on obtaining other acceptable employment

[42] Although I have determined that there is no jurisdiction for the Commission to determine the applications, having heard from all of the employees and learning the structure between the three entities at [32], the Commission would not be satisfied that the employer, whether it was the Applicant or Melbourne Classic obtained other acceptable employment for the employees.

[43] There was little effort beyond Mr Kennedy approaching some employees asking them if they wanted to work for Rocktrans. The only employee to accept employment with Rocktrans, Mr Fletcher, does not know if his service and entitlements are recognised. Given that Mr Duggal has no affiliation with Rocktrans, he is not able to speak to this issue.

[44] The Murdoch letter made available for employees is no more than good will from the Applicant and Melbourne Classic. It is honourable that it did not wish for employees to be jobless, when the contract was secured by a competitor. It does not equate, however, to the Applicant or Melbourne Classic having assisted with obtaining acceptable employment. Any work to be performed by the respondent employees at Murdoch is said to be precarious given its casual nature and early days in the employment relationship.

Conclusion

[45] I have decided to dismiss the nine applications for want of jurisdiction as the employer of each of the employees has not made the application.

[46] Even if there was jurisdiction, relevant to the information presently before the Commission I would not be satisfied that s.120(1)(b)(i) or (ii) has been met, and accordingly the applications would be dismissed.

[47] An Order in respect of each of the applications, dismissing the application will be issued reflecting this decision.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

<PR721648>