Western Australian Industrial Relations Commission

Civil penalty for failing to make redundancy payments

The Industrial Magistrate upheld three employees’ claims for redundancy entitlements.  The Court imposed a civil penalty on the employer ($25,500) and on the CEO personally ($5,100), based on the ‘size of the loss incurred by each’ employee, that the employer did not deliberately defy the law and that the respondent has an unblemished record. 

The employer was a service provider to the Commonwealth government.  In April 2015, it learned that its government contract would not be renewed.  Accordingly, the employer told the employees that there would be no work for them after June 2015 and their employment would come to an end.   

The employer and its CEO alleged that the employees were not entitled to redundancy payments because: 

(a)   In May 2015, the employees were dismissed for their conduct in allegedly undermining the employer’s efforts to lease its premises to a third party;

(b)   The employees are excluded from redundancy entitlements because they were not employed for a continuous period of more than 12 months and their employment was for a specified period of time; or

(c)   The employer ‘obtained acceptable alternative employment’ for the employees. 

His Honour Industrial Magistrate Cicchini held that the employer’s dismissal of the employees for their alleged conduct was not effective.  His Honour concluded that the employer had already terminated the employment in April 2015 when it told the employees that there would be no work for them after June 2015.  That brought the employees’ contracts of employment to an end by way of genuine redundancy.  ‘All [the employer] could do [after that] was to bring the employment relationship to an end’ because the employment had already been terminated and could not be terminated again. 

The Industrial Magistrate also found that the employees were employed continuously for more than 12 months despite being appointed on rolling fixed term contracts.  The employment was continuous because renewal of the contracts was a ‘mere formality’ and the employment often continued despite the contracts having expired.  Also, the facts did not support the employer’s argument that the employment was for a specified period. 

His Honour noted that the employer had spoken to its successor, the company that won the government contract, about taking on the employees.  The employer argued that it was excused from making redundancy payments to the employees because it found acceptable alternative employment for them.  The Court held that for an employer to be excused from making redundancy payments, the employer must be a ‘strong, moving force towards the creation of the employment opportunity’; the employer must do more than merely establish contact with a prospective employer.  The employer did not call enough evidence to satisfy the Court that it convinced its successor to take on the employees.  Therefore, the employer was not excused from paying the redundancy entitlements. 

The decision as to liability can be read here

The decision as to quantum, interest, penalty and costs can be read here

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