Join our

mailing list.

Keep up to date with our latest insights.

  • This field is for validation purposes and should be left unchanged.
Perspective

Fair Work Commission rejects employer’s request for 80% reduction in redundancy payable

Published:

Share

In Print Logistics Unit Trust [2020] FWC 3128, Print Logistics (Aust) Pty Ltd (Print Logistics) was unable to secure a reduction in the redundancy payable to one of its employees, (Ms Karwa).

Print Logistics’ financial position declined rapidly in recent months as a result of the significant impact of COVID-19 and the associated lockdown and deterioration in economic activity. Its financial reports clearly show it is in a poor financial position. Its accounts payable are approximately double that of accounts receivable and it has been renegotiating payments to suppliers to account for the financial difficulties it is currently facing.

However, this was not enough to satisfy the Commission that Print Logistics’ is not financially competent or possessed of the necessary funds to make the payment. Despite its poor financial position, Print Logistics it has approximately $120,000 cash at bank. This is in contrast to last week’s case in which Acme Preston was successful in its applications – read more, here. The Commission found the reduction sought ($5,593.60) would provide only some small assistance to Print Logistics’ financial position.

Lessons

  1. An employer must prove it is not financially competent or possessed of the necessary funds to make the redundancy payment and has no reasonable source of funds. This includes establishing the reduction will significantly assist its financial position – for example, by having a beneficial effect on other employees thereby enhancing their prospects of continued employment. It is not enough that it will be beneficial or convenient to not pay the amount.
  2. If a business is likely to become insolvent, the Commission will consider the effect the sought reduction will have on the status of the employee as a potential creditor (i.e. diminishing their rights under GEERS).

Written by Kim McLagan and Nes Demir

Have a question or need advice?

Our team is here to provide the right advice for your business and workforce. If you have a question or require assistance, please contact Andrew Douglas.

Published:

Share

Stay updated with our Friday Workplace Briefing

Every Friday at 10:30am, join us online to hear the critical news and developments that affect your workplace. We’ll keep it simple, pragmatic and to 30 minutes.

Have a question or need advice?

Our team are here to provide tailored advice for your business and workforce.

Managing Principal - Victoria

Legal Solutions.

Found.

Anything we can help you with?

Fusce sed egestas massa. Praesent eu sem pulvinar, condimentum massa ut, finibus ante. Praesent congue magna quis lectus placerat, tincidunt pellentesque ex placerat. Quisque facilisis quam et augue rutrum, at laoreet purus bibendum.

Join our

mailing list.

Keep up to date with our latest insights.
  • This field is for validation purposes and should be left unchanged.