s.120 - Application to vary redundancy pay for other employment or incapacity to pay

Islington One Hotel Pty Ltd t/a Islington Hotel

[1] Until recently, Islington One Hotel Pty Ltd operated the Islington Hotel in Hobart. It employed Manjot Sharma in the position of "Front of House" at the Hotel. His employment commenced on 27 October 2022.

[2] Islington One negotiated a sale of the Hotel. As a consequence, in a letter to Mr Sharma dated 16 January 2026 the company stated:

"As previously advised, Islington One Hotel Pty Ltd is currently in the process of being sold. We can now confirm the anticipated completion date is 6 February 2026, subject to the sale proceeding as planned. Following the completion of the sale, Islington One Hotel Pty Ltd will cease operating the business under the current ownership, and as a result we will no longer be able to offer ongoing employment beyond this date.

Due to the operational changes arising from the sale, your position is no longer required. Accordingly, this letter serves as formal notice that your employment will end on 6 February 2026.

This termination is on the grounds of genuine redundancy.

You will be paid all outstanding wages and entitlements owing up to your final day of employment, including:

• Redundancy pay (where applicable, and to be confirmed);

• Any accrued but unused annual leave and other leave entitlements (if applicable); and

• Any other outstanding allowances and entitlements payable to you.

We have been working with the incoming owner to make this transition as smooth as possible. The incoming owner has indicated they may wish to retain members of the existing team and will meet with you to discuss any potential employment opportunities. Any offer of employment (including terms and conditions) will be made directly by the incoming owner."

[3] As it transpired, the sale of the Hotel was delayed until 15 March 2026. Mr Sharma remained employed by Islington One until that date.

[4] Mr Sharma secured employment with the new operator of the Hotel, Boxwood Spa Pty Ltd, to take effect immediately on that company taking over the management of the Hotel. He will be employed at the Hotel as "Front of House Attendant" on largely similar terms to those he had enjoyed with Islington One.

• [5] Islington One has applied to the Commission under section 120 of the Fair Work Act 2009[1] for an order to reduce Mr Sharma's redundancy pay to two weeks' pay. The premise of the application is that the offer of employment from Boxwood Spa was "other acceptable employment".

[6] Mr Sharma does not oppose the application.

[7] Even so, for the following reasons I have determined to dismiss Islington One's application.

[8] Section 120 relevantly provides:

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.

• [9] The approach that I should take to Islington One's application is well established.[2] The first step is to determine whether section 120 applies, which requires the conditions in section 120(1) to be met: that Mr Sharma has an entitlement under section 119 to redundancy pay, and that Islington One has obtained other acceptable employment for him. An employer "obtains" other acceptable employment when it acquires or gets the employment by its conscious, intended acts.

[10] If section 120 applies, the next step is to decide whether Mr Sharma's entitlement to redundancy pay should be reduced and, if so, by how much. This requires the exercise of a broad discretionary power.

[11] The fact that Mr Sharma did not oppose the application does not remove from Islington One the onus of demonstrating that section 120 applies, and if so that I should exercise the discretion to reduce his redundancy pay to two weeks.

• [12] The first condition in section 120 is met: under section 119, Mr Sharma was entitled to 7 weeks redundancy pay.[3] However, I am not satisfied that his employment with Boxwood Spa was obtained by Islington One.

"Islington Hotel submits that the Commission should reduce the redundancy entitlement to two weeks' pay, on the basis that Mr Sharma has obtained acceptable alternative employment." (My emphasis)

[14] But the question is not simply whether Mr Sharma has secured ongoing and comparable employment with Boxwood Spa. Islington One is required to demonstrate that he did so as a result of its conscious, intended acts.

[15] In its application, Islington One stated:

"We have negotiated offers of employment with the new business owner on a like-for-like role, Front Office Supervisor, Part-time 14 hours a week."

[16] However, there is no evidence of such negotiations. Islington One's evidence and submissions were in large part confined to a comparison of Mr Sharma's terms of employment at Islington One with those that Boxwood Spa had offered him. It led no evidence to demonstrate that it had obtained that employment for Mr Sharma.

[17] It is significant that Islington One's letter to Mr Sharma of 16 January 2026 did not suggest that it had secured him employment with Boxwood Spa. The potential for such employment was couched in terms that made it clear that this was a matter entirely within Boxwood Spa's discretion, that is:

"The incoming owner has indicated they may wish to retain members of the existing team and will meet with you to discuss any potential employment opportunities." (My emphasis)

• [18] In fairness to Islington One, I observe that these proceedings ran in tandem with another similar application that Islington One made arising out of the same circumstances.[4] In those proceedings, Islington One filed a series of emails which I understand to be between representatives of Islington One (through an entity described as "La Vie Hotels & Resorts") and Boxwood Spa. As this and the other application have been determined "on the papers", I have had regard to those emails even though they were not expressly filed as part of Islington One's evidence in these proceedings.

[19] The high point of the email evidence was as follows:

(1) On 7 January 2026, Ryan Isemonger, the Group Director of People and Culture at La Vie Hotels & Resorts, sent an email to Paul Lanzone at a Boxwood email address stating:

"As we move into a tighter timeframe, we're keen to work closely together to ensure the communication to team members around the sale and their potential employment options is handled as smoothly and thoughtfully as possible.

From our perspective, aligning the timing of the sale notification, termination notice, and any offers of ongoing employment will be important in helping reduce uncertainty and providing the team with confidence around continuity. We're planning to issue the notices by this Friday at the latest, and it would be ideal if your team were also in a position to issue offers of employment on the same day, to provide reassurance to those who may be concerned. Please confirm that this is achievable for your team.

I understand you are speaking with most of the team on Thursday to get a feel for their suitability, would it be possible to receive the target list by Friday morning? This will allow us to ensure we provide the appropriate notice periods in line with the NES and manage the process consistently for the Team." (My emphasis)

(2) On the same day, Katrina Green, the Manager of Operations at Boxwood Spa, sent an email to Mr Isemonger stating:

"We can meet the proposed timeframe and are comfortable issuing offers on Friday to align with the sale notification and termination notices. We're also looking forward to meeting with the core Islington team tomorrow to further understand suitability and roles.

To help ensure we can provide offers that are as close to like-for-like as possible, it would be greatly appreciated if you could please share the existing staff contracts with us. This will allow us to align terms appropriately and support a smooth and consistent process for the team."

(3) Also on 7 January 2026, Mr Isemonger sent an email to Ms Green stating:

"I have attached a zip file of the contracts for the Team at Islington."

(4) On 15 January 2026, Nelsy Zreik, the Group Director of Finance - Australia for La Vie Hotels and Resorts, sent an email to Mr Lanzone stating:

"In addition, if you are proceeding with employing the employees, would you be able to share the offers of employment with us? As you are aware, we are working to a tight turnaround with notices, and having this information will help us mitigate any potential issues." (My emphasis)

[20] These emails reveal that Islington One provided information regarding its employees to Boxwood Spa to facilitate Boxwood deciding whether to make offers of employment to them, and if so on what terms. The emails fall short of demonstrating that such offers were the subject of negotiation, much less that Boxwood Spa was under any obligation to offer employment to Islington One employees. The emails make no reference to Mr Sharma.

[21] Having regard to the available evidence, I am not satisfied that Islington One acquired or got Mr Sharma's employment with Boxwood Spa by its conscious, intended acts.

[22] It follows that the pre-condition in section 120(1)(b)(i) is not met. Consequently, section 120 does not apply.

[1] In this decision, references to legislative provisions are to provision of the Fair Work Act

[2] See Australian Commercial Catering Pty Ltd v Marcelia Powell and Maria Togia; Marcelia Powell v Australian Commercial Catering Pty Ltd [2016] FWCFB 5467 at [35]- [38]

[3] This was not a matter of controversy. I note for completeness that the exclusions in s 121(1) of the Act do not apply in Mr Sharma's circumstances.

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