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FWC allows Sydney company to drastically slash redundancy payouts

Maja Garaca Djurdjevic
Maja Garaca Djurdjevic
16 June 2020 1 minute readShare
Fair Work Commission

The Fair Work Commission has affirmed an employer’s decision to cut redundancy payouts to four employees by nearly $30,000, after the company argued that the COVID-19 pandemic has put it under “significant” financial strain.

The Fair Work Commission has allowed a Sydney-based company, ACME Preston, to reduce redundancy payments to four employees by over $29,600 to just $14,400, after the company’s Ingleburn plant was forced to shut.

The company, having recognised its inability to pay the full $44,000 it owed its employees under the Fair Work Act, turned to the FWC to seek a variation, arguing that the COVID-19 pandemic had set the already burdened plant on the road to closure.

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Although redundancy pay is calculated based on the length of time an employee was employed by a business, the FWC has the power to make adjustments it considers appropriate.

Before arriving at a decision, deputy president Lyndall Dean was told of the company’s history, revealing that Craig Dowson, the company director, had purchased the ailing Ingleburn plant in 2019, and that the final decision to close the plant was made as a result of the coronavirus-induced hardship, hence making the employees working there redundant.

 

In terms of the financial position of ACME Preston, Mr Dowson told the FWC that since the COVID-19 outbreak, he had drawn a $200,000 loan from his family business and that the company was now down to only $38,000 cash in the bank. 

He also claimed that the company’s position has been exacerbated by trade debtors taking longer to pay their invoices. Further evidence suggested that banks were not “forthcoming” in negotiations for a small business loan and overdraft facility.

Asked whether the business was eligible for the JobKeeper payment, Mr Dowson explained that they did not meet the reduction in turnover requirements due to having acquired another business in November 2019.

The FWC did not have any further JobKeeper questions for Mr Dowson, failing to establish whether he was aware of the availability of alternative tests, but documents reveal that the redundancies were made on 17 April, or ahead of the launch of the JobKeeper enrolment phase.

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In announcing her decision, deputy president Dean said: “I am satisfied that the company is under significant financial strain.

“This is evident given the financial position of the company, and in particular the evidence that the company currently held only $38,000 cash in the bank, and had wages for its remaining staff due the following week.

“I am satisfied it does not have a reasonable source of other funds, having already borrowed from Mr Dowson’s family business to the amount of $200,000.”

According to FWC documents, the employees were entitled to a combined 43 weeks of redundancy pay, but received just 14.

FWC allows Sydney company to drastically slash redundancy payouts
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Maja Garaca Djurdjevic
Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of My Business. 

Maja has a decade-long career in journalism across finance, business and politics. Now a well-versed reporter in the SME and accounting arena, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies and enabling citizens to influence decision-making.

You can email Maja on [email protected] 

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