Company applies to get out of paying worker’s redundancy

A scaffolding company has applied to get out of paying a worker’s redundancy entitlements, arguing it can’t afford it.

The Gold-Coast based company made a formal application in the Fair Work Commission.

Company applies to get out of paying worker’s redundancy

‘Safa Scaff’ owes the worker $12,500 (7 weeks of wages).

However, the company wants the amount reduced to zero because of financial distress.

In a letter to the worker, Safa Scaff director Daniel Wundke wrote:

“The company is experiencing financial distress and this will be further exacerbated if a lump sum payment is made to you as requested. 

“The company has lodged an application with Fair Work to review your redundancy based on the financial distress it is currently experiencing.”

Redundancy pay

In most cases, when an employee’s position is made redundant, their employer must give them redundancy pay, also known as severance pay.

The amount of redundancy is based on the employee’s continuous service with the employer.

However, an employer can apply to the Fair Work Commission to have the amount reduced if:

• the employer finds other acceptable employment for the employee; or
• the employer can’t afford the full redundancy amount.

No capacity to pay

According to Safa Scaff’s accountant, the company recorded a loss of $55,000 for the five months until 30 November.

“It is our assessment that the business has no current capacity to meet the payment requirement of the redundancy,” he wrote.

However, industrial advocate Miles Heffernan is sceptical.

Mr Heffernan’s firm, Industrial Relations Claims, is representing the worker in the Commission.

“This company is crying poor, however, it has connections to two trusts,” he said.  “And we don’t know the assets or those trusts.

“That’s why we have asked the Commission to order the employer to hand over all records so we can confirm what the true financial position of the company is.”

Worker feels victimised

The company also owes the worker more than $10,000 in outstanding leave and other entitlements.

In a letter to the Commission, he wrote:

“I feel that I have been victimised and misled in the matter of my redundancy payout as statements made by the Director that I was receiving a really generous package were inaccurate.”

Commissioner Jennifer Hunt will determine the matter in the coming weeks.

“Businesses shouldn’t be allowed to hide cash and assets in trusts in order to get out of paying their lawful obligations,” Mr Heffernan said.

---