s.120 - Redundancy pay

Variation of redundancy pay - employee offered and accepted a new role - consent of employee - determination made

• [1] On 5 March 2025, an application was filed by A Class Fitouts Pty Ltd (the Applicant), pursuant to s.120 of the Fair Work Act 2009 (Cth) (the Act) to vary the redundancy pay in respect of its employee Mr Daniel Watters, a former employee of the Applicant whose employment ended by reason of redundancy. The Applicant sought to have Mr Watters' redundancy entitlement reduced on the basis that he had been offered and accepted alternative employment.

• [2] The undisputed factual background of the application can be summarised as follows.

• [3] The Applicant was a small business employer with less than 15 employees at the time the application was made. Mr Watters had worked for the Applicant for 6 years and 11 months as at the time of the application being filed. At the time that his employment was terminated, he was employed by the Applicant as a Cabinet Maker Tradesman, and he was accordingly covered by the Joinery and Building Trades Award 2020 (Award).

• [4] Following a large downturn in business which significantly affected the Applicant's business, as well as the sale of the factory which had been leased to the Applicant, the Applicant was to cease operations and accordingly Mr Watters' job would no longer be required. Mr Watters was offered and accepted a new role as a Cabinet Maker Tradesman.

• [5] While employed by the Applicant Mr Watters received $28.00 per hour as a base rate of pay as a Cabinet Maker Tradesman in Caringbah, working 40 hours per week. Mr Watters' new position is also as a Cabinet Maker Tradesman located in Caringbah, working 40 hours per week and receiving $28.00 per hour. Accordingly, the conditions of the new role are the same as his previous role.

• [6] The Applicant obtained this role for Mr Watters. Mr Watters was paid four weeks in lieu of notice in accordance with the Act and commenced in the new role less than four weeks after being made redundant by the Applicant.

• [7] In these circumstances, the Applicant sought that Mr Watters' redundancy entitlement be reduced to $0.

• [8] The matter was listed for Mention and Directions on 12 March 2025. Mr Watters consented to the reduction to his redundancy entitlements as sought in the application and made submissions that he considered that the Applicant had obtained him other acceptable employment.

• [9] In order to determine the application, the Commission must first be satisfied that Mr Watters has an entitlement to redundancy pay 'because of' s.119 of the Act.[1]

• [10] At all relevant times, the Applicant and Mr Watters were covered by the Award.

• [11] The National Employment Standards (NES) in the Act prescribes minimum entitlements for employees in respect of redundancy pay upon satisfaction of the matters prescribed by s.119(1). The amount of redundancy pay to which an employee is entitled is set out at s.119(2) of the Act, subject to the application of ss.121, 122 and 123 which describe situations in which an employee does not have this entitlement. Relevantly, s.121(1)(b) provides that s.119 of the Act does not apply to the termination of an employee's employment if, 'immediately before the time of the termination, or at the time when the person was given notice of the termination' the employer is a 'small business employer.'

• [12] It is not in dispute that the Applicant was a small business employer with less than 15 employees at the relevant time. Accordingly, as a small business, s.119 does not apply to the Applicant by reason of s.121(1)(b) of the Act.

• [13] Clause 37 of the Award specifies that clause 37.4 of the Award 'supplements the NES' by providing redundancy pay for employees of a small business employer. There is no contest between the parties that:

(a) As a consequence of the business closure, Mr Watters is entitled to be paid redundancy pay by the Applicant because his employment was terminated 'at the employer's initiative because the employer no longer requires the job done by the employee to be done by anyone' (per clause 37.4(c)(i)); and

(b) The redundancy entitlement payable to Mr Watters, having regard to his period of continuous service with the Applicant upon termination being 6 years and 11 months, is eight weeks' pay (per clause 37.4(d)).

• [14] Pursuant to clause 37.4(f) of the Award, the terms of s.120 of the Act apply as if s.120 refers to 'clause 37.4(c)' rather than 'section 119'. Accordingly, it is not in dispute, and I am satisfied that the Commission can determine the application under s.120(2) of the Act by reference to the quantum of redundancy pay prescribed under clause 37.4 of the Award.

• [15] Having considered the material filed, I find that the offer of Cabinet Maker Tradesman in Caringbah, working 40 hours per week at the same rate of pay is accordingly the same as or equal to his previous role and constitutes 'acceptable employment' within the meaning of s.120 of the Act.

• [16] Given the circumstances, it is appropriate that the total redundancy entitlement due to Mr Watters of $8960 be reduced to $0. An order will be issued to this effect.[2]

[1] See, Maritime Union of Australia, The v FBIS International Protective Services (Aust) Pty Ltd [2014] FWCFB 6737 at [23]- [33]

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