Wittmont Pty Ltd

[2013] FWC 9652

[2013] FWC 9652

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.120—Redundancy pay

Wittmont Pty Ltd
(C2013/6503)

DEPUTY PRESIDENT MCCARTHY PERTH, 9 DECEMBER 2013

Variation of redundancy pay.

[1] Wittmott Pty Ltd (the Applicant) is a small business which manufactures timber doors and windows. The Applicant is covered by the Joinery and Building Trades Award 2010.

[2] Due to a downturn in business the Applicant dismissed two employees, leaving five employees employed, three in the factory, one in the office, and an on-site fitter.

[3] The two employees that were dismissed are entitled to redundancy pay. The Applicant has calculated redundancy pay for one employee (Employee A) at the equivalent of seven weeks and a total of $6,199. The Applicant calculated the entitlement for the other employee (Employee B) at four weeks pay and a total of $3,268.

[4] The Applicant made application to vary the redundancy pay pursuant to s.120 of the Fair Work Act 2009 (the FW Act).

[5] I notified the employees concerned regarding the application and conducted a Conference involving those two employees and the Applicant. I requested that the Applicant provide me with financial information. I suggested that they obtain a statement from their accountants to verify the information, or a statutory declaration, or some other form of information upon which they could rely to substantiate their claim that they cannot pay the redundancy entitlements. I also requested the Respondents provide me with information as to their circumstances and any reasons why they believed that the redundancy entitlements should not be reduced.

[6] Following those proceedings the Applicant provided information in the form of a profit and loss statement for the financial year ending June 2013, regarding their financial plight as confirmation of the explanation and information provided at the conference. A spreadsheet with the cash flow projections until February 2014 was also provided. I was not provided with a statutory declaration about that statement, nor was I provided with any information from their accountants.

[7] The profit and loss statement for the financial year ending June 2013 showed that the business suffered a substantial loss of nearly $70,000 for the previous year. Employment expenses for the year were about 50% of overall expenses, cost of sales about 35% and lease costs about 10%. Other expenses made up the balance, but the bottom line was that there was a loss.

[8] The Applicant explained that the business had experienced a massive downturn of work over the last two years. They believed they may have to close down the business in the near future unless there was an improvement.

[9] The inference from the submissions and material provided by the Applicant is that if redundancy pay is not reduced for the two employees that were dismissed then the business may cease trading altogether earlier than would otherwise occur, or other employees might be dismissed.

[10] The two employees affected also provided written material outlining their circumstances and the effect of their dismissals on them.

[11] Employee A asserts that he is entitled to eight weeks redundancy pay as he has been employed by the Applicant for more than four years but less than five years. Employee B asserted that he is entitled to four weeks redundancy pay as he has been employed for more than one year but less than two years.

[12] Employee A submitted that he has been a loyal and diligent employee and received negligible wage increases during his term of employment. He says he was offered another position at another company in February 2013 but after he spoke to the Applicant he decided to stay as he had been encouraged to do so and reassured by them that his job was safe. Employee A is a New Zealand citizen and as a consequence has received no support from Centrelink or other agencies. He is married and has one dependent child. Employee A also outlined a series of measures and indicators that he contended showed that the Applicant had the capacity to pay the entitlements in full to both employees.

[13] Employee A also made a number of comments critical of the Applicant regarding the consultation and management of his redundancy.

[14] Employee B relied on the submissions of Employee A and also stated that he had been repeatedly assured that his job was safe and did not need to look for other employment. He was also critical of the Applicant and the manner in which his dismissal had occurred.

[15] The FW Act in s.120 provides that the Fair Work Commission (the Commission) may determine that the amount of redundancy pay is reduced to a specified amount that the Commission considers appropriate.

[16] The preconditions for that determination to be able to be made is that the employee is entitled to be paid an amount of redundancy pay, and the employer has either obtained other acceptable employment for the employee or cannot pay the amount.

[17] Here it is clear that the two employees concerned are entitled to an amount of redundancy pay. It is not disputed that the employer has not obtained other acceptable employment for the employees. The Applicant relies solely on the condition that the Applicant cannot pay the amount.

[18] I have doubts from the information that the Applicant provided about whether they cannot pay the entitlements. The Applicant provided no external or independent advice about their plight, and no reason, or explanation why independent assessment had not been provided. I was also not provided with the balance sheet of the Applicant, nor any explanation or information regarding the assets and liabilities of the Applicant.

[19] It seems to me that the Applicant can pay the redundancy payments. Without more information I am not convinced that the five employees that are still employed will be dismissed, and nor am I convinced about the continued viability of the business.

[20] I am therefore not in a position where I can confidently find that the Applicant cannot pay the redundancy payment due to the two employees.

[21] The application is therefore dismissed.

DEPUTY PRESIDENT

Final written submissions:

Applicant, 22 November 2013.

Respondent, 19 November 2013.

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