A company has successfully applied to the Fair Work Commission (FWC) to reduce its statutory obligation to pay redundancy pay after helping an employee secure alternative employment with another company.
Statutory Redundancy Entitlement
The National Employment Standards (NES) usually entitle national system employees to receive redundancy pay if their employment ends due to redundancy.
However, various exceptions can apply including where an employer obtains other acceptable employment for a redundant employee.
In that case the employer may apply to the FWC to have the NES redundancy amount reduced to what the FWC considers appropriate including to zero.
In Get Started Pty Ltd v Lee:
- the company employed Mr Lee as a web developer for almost 2 years
- the company experienced a downturn in business and notified Mr Lee that his position was to be made redundant effective 2 March 2018
- prior to 2 March 2018, another third-party developer, Levo Group Pty Ltd (Levo), made contact with the company and asked to ‘borrow’ some of its personnel to assist with an increase in work
- in response, the company recommended Mr Lee for employment and provided Levo with a link to Mr Lee’s LinkedIn profile
- Mr Lee was interviewed by Levo and was subsequently offered a position which he accepted
- thereafter the company applied to the FWC to have Mr Lee’s redundancy entitlement (4 week’s pay) reduced to zero on the basis that it had obtained other acceptable employment for him
- had to determine if the company had ‘obtained’ other acceptable employment for Mr Lee (ie. whether it was responsible for Mr Lee’s employment with Levo)
- heard as part of the company’s submission that it actively proposed Mr Lee for a position with Levo (instead of simply allowing him to be ‘borrowed’) and had it not been for these active efforts Mr Lee would never have been offered the position
- heard as part of Mr Lee’s submission that Levo offered him employment based on his skills and experience and that he ultimately resigned from Levo as the role was not aligned with his expectations (ie. it was ultimately not ‘acceptable’ to him)
- considered the ordinary meaning of ‘obtained’ and determined that the act of ‘obtaining’ required the ‘conscious, intended acts of the person concerned’
- held the company had ‘obtained’ other acceptable employment for Mr Lee as Levo did not initially intend to employ anyone until Mr Lee was actively recommended for a permanent position and Mr Lee voluntarily accepted Levo’s offer of employment meaning the terms of the offer as disclosed to him were by definition acceptable
- noted that Mr Lee commenced employment with Levo immediately following his redundancy, and that his employment with Levo involved a higher salary
- decided that as Mr Lee suffered no economic loss due to the redundancy, it exercised its discretion to reduce Mr Lee’s redundancy entitlement to zero
In respect of the decision:
- it is possible to succeed in such applications to the FWC
- the time and cost involved (as well as the merits) of making the application needs to be carefully considered
- even if the application is successful, it only operates in respect of the NES amount
- other sources of redundancy entitlements (such as under an Award, enterprise agreement, employment agreement or company policy) always need to be considered
Please call the leading employment lawyers in Parramatta, the Matthews Folbigg Workplace Solutions employment law team on 9635 7966 to speak with one of our employment lawyers if you require any assistance or advice.