Wallis Drilling Pty Ltd v Jacob Heaney

[2014] FWC 3162

[2014] FWC 3162

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Wallis Drilling Pty Ltd
v
Jacob Heaney
(C2014/3686)

COMMISSIONER WILLIAMS PERTH, 16 MAY 2014

Variation of redundancy pay.

[1] This decision concerns an application by Wallis Drilling Pty Ltd (Wallis Drilling) pursuant to s.120 of the Fair Work Act 2009 (the Act) to vary the redundancy pay obligation in s.119 of the Act with respect to Mr Jacob Heaney (Mr Heaney).

Factual background

[2] Mr Heaney was first employed by Wallis Drilling in July 2012 and was employed in the coal seam gas division.

[3] In December 2013 Mr Heaney, along with other employees, was informed that the client Arrow Energy would cease all drilling on 20 December 2013 and would not resume until April 2014 at the earliest. Consequently the coal seam gas division of Wallis Drilling would be shut down.

[4] Wallis Drilling provided the employees in the coal seam gas division the alternatives of taking accrued paid leave, taking unpaid leave or accepting work in other divisions of Wallis Drilling where it was available.

[5] Mr Heaney accepted an offer of work in the iron ore division. On 28 January 2014 Mr Heaney signed a contract of employment with Wallis Drilling. Appendix 1 identifies the commencement date of employment as 10 July 2012 and the commencement date of this new contract as 20 January 2014.

[6] On 13 March 2014 Wallis Drilling wrote to Mr Heaney. This letter explained that while the closure of the coal seam gas division was initially believed to be temporary it was now apparent that the division was not going to recommence in the foreseeable future. Wallis Drilling explained it would honour the new contract and provide Mr Heaney with ongoing work.

[7] Mr Heaney has continued to be employed by Wallis Drilling in the iron ore division and remains in employment at the time of the hearing of this matter.

Consideration

[8] It is apparent from the material provided by Mr Heaney that he believes his job in the coal seam gas division was made redundant.

[9] Wallis Drilling explained that they have made this application because they believe they have provided Mr Heaney with acceptable alternative employment and his position is not redundant.

[10] This application has been made under s.120 of the Act. This provision and the related provision s.119 are set out below:

“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

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.”

[11] In terms of this application it is first necessary to consider whether s.120 of the Act applies to the facts of this matter.

[12] It is clear that s.120 only applies if an employee is entitled to be paid redundancy pay because of s.119.

[13] Further it is clear from s.119 that an employee is entitled to be paid redundancy pay only if the employee’s employment is terminated at the employer’s initiative.

[14] It is a question of fact to be determined on the evidence before the Commission whether there has been a termination of employment at the employer’s initiative. In this case it is clear that Wallis Drilling have not terminated Mr Heaney’s employment at all. Mr Heaney remains employed with Wallis Drilling, the fact that Mr Heaney accepted work in the iron ore division understanding that to be a temporary move does not alter the fact that he has not been terminated at the initiative of his employer. Consequently he is not entitled to be paid redundancy pay by Wallis Drilling under s.119 of the Act.

[15] Given this is the case there is no basis on which Wallis Drilling are able to make this application under s.120 of the Act. This application is ill-conceived and appears to have been based on a misunderstanding of the legislation. This application will now be dismissed.

COMMISSIONER

Appearances:

R. Jreige appearing for the Applicant.

Hearing details:

2014.

Perth:

May 13.

Final written submissions:

Respondent on 13 May 2014.

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