Redundancies; the fundamentals

Here is a summary of the law which applies to redundancies, from an extract of a  recent decision of the Fair Work Commission.

“An employee is entitled to redundancy payments under s. 119 when the employee’s employment is terminated because the employer no longer requires the job to be done by anyone and this is not due to the ordinary and customary turnover of labour. In the present case it is necessary to state the obvious: any obligation to pay redundancy pay under s. 119 is an obligation that is placed on the employer of the person whose employment is terminated on the grounds set out in that section. The obligation arises at the time of the termination of the employee’s employment.

Section 120 of the Act provides a mechanism for an employer to make an application to the Commission for a reduction in the amount of redundancy pay that an employee is entitled to under s. 119 on the basis that the employer has obtained other acceptable employment for the employee or cannot pay the amount. At the risk of stating the obvious, only an employer which has terminated the employment of an employee in circumstances where the employee is entitled to redundancy pay under s. 119 of the Act can make an application under s. 120 of the Act.

If an employer obtains other alternative employment for the employee, the employer cannot unilaterally decide that the alternative employment is acceptable and refuse to pay an amount of redundancy pay to which the employee is entitled by virtue s. 119. Rather the employer in such circumstances must make an application to the Commission under s. 120(2) and succeed in establishing to the satisfaction of the Commission that the alternative employment is acceptable and obtain an order for the payment of a specified amount (which may be nil).

Section 120 of the Act does not provide a mechanism for an employee whose employment is terminated due to redundancy to make an application seeking payment of redundancy pay if the employer asserts that it has found alternative employment for the employee and refuses to pay redundancy payments to the employee. The remedy for the employee in those circumstances is to make an application to a Court seeking payment of the amount of redundancy pay to which the employee asserts an entitlement under s. 119 of the Act because the employer has not sought and been granted an order under s. 120(2).”

Gravenall  [2020] FWC 1410 delivered 19 March 2020 per Asbury DP