Airstep Flooring Pty Ltd T/A Imagine Floors v Mr Anton Oskolkov [2025] FWC 176

1 Fair Work Act 2009 s.120 - Application to vary redundancy pay for other employment or incapacity to pay Airstep Flooring Pty Ltd T/A Imagine Floors v Mr Anton Oskolkov (C2024/9378) Airstep Flooring Pty Ltd T/A Imagine Floors v Mr Aaron Hamilton (C2024/9379) COMMISSIONER YILMAZ MELBOURNE, 30 JANUARY 2025 Variation of redundancy pay Background [1] Airstep Flooring Pty Ltd T/A Imagine Floors (the Applicant) has made two applications under s.120 of the Fair Work Act 2009 (the Act) seeking an order to reduce the redundancy pay to zero in respect of two employees: Mr Anton Oskolkov and Mr Aaron Hamilton. The applications are made pursuant to s.120(b)(i) of the Act on the basis that the Applicant obtained and offered acceptable alternative employment in a related business. Both Mr Oskolkov and Mr Hamilton accepted the offer of alternative employment and agreed to this application by the Applicant. Both employees agreed to accept employment with Airstep Australia Pty Ltd which manufactures polyurethane foam carpet underlay. Commencement with Airstep Australia Pty Ltd commenced at the time of the divestment of Airstep Flooring Pty Ltd by its parent company KPJ Group Australia on 31 December 2024. The Applicant does not rely on s.120(b)(ii) of the Act. [2] In addition to the application to vary the severance pay to zero applicable under s.119 of the Act, the Applicant refers to the redundancy clause in the applicable enterprise agreement. The Airstep Australia Pty Ltd and United Workers Union and Australian Manufacturing Workers Union Collective Agreement 20231 (the Agreement) applies to the employees transferring from Airstep Flooring Pty Ltd. The Applicant submits that the terms and conditions had applied to the employees while employed by Airstep Flooring Pty Ltd and therefore the application to vary is also consistent with clause 37 of the Agreement. Both former and new employer were/are KPJ Group Australia businesses and situated at the same site that is covered by the Agreement. [2025] FWC 176 DECISION -- 1 of 4 -- [2025] FWC 176 2 [3] Mr Oskolkov was employed by the Applicant from 27 February 2017 and completed 7 years and 10 months service and Mr Hamilton was employed from 28 March 2022 and completed 2 years and 9 months service. Both employees perform work in the warehouse and their positions were made redundant with the divestment of Airstep Flooring Pty Ltd which is an importer of hard flooring. However, both employees confirmed their acceptance of the offer of suitable alternative employment. Their work remains the same except for the product that they deal with, there is no reduction in their terms and conditions of employment and their periods of employment will be recognised with continuous service on the transfer of employment. Coverage under the Airstep Australia Pty Ltd and United Workers Union and Australian Manufacturing Workers Union Collective Agreement 2023 (the Agreement) is not affected and the full benefits of the Agreement will apply. Legislation [4] The Applicant submits that both employees affected by this application are covered by the Agreement. The Agreement contains at clause 35 entitlements for redundancy pay that is more generous than provided by the NES entitlement. Specifically in subclause 35.4, additional notice in the event of redundancy is provided, noting that this is in addition to the notice provisions in clause 32. And at subclause 35.5, provision is made for severance pay entitlements. Both of these subclauses are subject to these applications. [5] Clause 37 of the Agreement allows for the “Company” (the Applicant) “to apply to the Fair Work Commission to reduce Employees’ severance pay in the event that it obtains suitable alternative employment with the Company, or in a transfer of business scenario under the Fair Work Act 2009 (Cth).” [6] Section 119 of the Act provides the entitlement to severance pay payable by an employer if an employee’s employment is terminated due to redundancy. The amount of redundancy pay is dependent on the period of continuous service with the employer and ranges from 4 weeks to 16 weeks. This provision applies to national system employers and those employers not excluded by s.123 of the Act. [7] Section 120 of the Act provides as follows: “120 Variation of redundancy pay for other employment or incapacity to pay (1) This section applies if: (a) an employee is entitled to be paid an amount of redundancy pay by the employer because of section 119; and (b) the employer: (i) obtains other acceptable employment for the employee; or (ii) cannot pay the amount. (2) On application by the employer, the FWC may determine that the amount of redundancy pay is reduced to a specified amount (which may be nil) that the FWC considers appropriate. -- 2 of 4 -- [2025] FWC 176 3 (3) The amount of redundancy pay to which the employee is entitled under section 119 is the reduced amount specified in the determination.” Evidence and submissions [8] On 16 January 2025 the Applicant and the two affected employees attended a conference scheduled to confirm the matters contained in the Applications. [9] On the evidence, it is established that the two employees were offered and they accepted alternative employment. Both employees stated that they agreed to the applications and accepted the alternative employment. The facts contained in the applications were confirmed. [10] The Parties identified the following features of the new employment: • The location in Dandenong South remains unchanged, • There is no change to the industrial instrument, • There is recognition of prior service as continuous, • The nature of the work remains unchanged, • There is no loss of conditions, and • With acceptance of the new job, the employees gain the additional benefits from the conditions within the Agreement. Consideration and conclusion [11] This application to vary redundancy was made under clause 37 of the Agreement and s.120 of the Act. Section 120 of the Act allows for the variation of redundancy provided under s.119 of the Act. The redundancy pay under s.119 of the Act applies to an employee where their job was made redundant.2 Section 123 of the Act provides the limits on the scope of the standard. None of those limits in s.123 apply in this matter. Nor does s.124 of the Act apply in this matter. [12] The severance pay in s.119 is a minimum national employment standard that applies even where there are more generous provisions contained in an Agreement.3 Further, an application to vary redundancy benefits in an enterprise agreement cannot be made by a s.120 application alone; the entitlement to vary must arise from the Agreement. In this matter, the Agreement has such a clause in 37. [13] Section 120 of the Act allows an employer to apply to the Commission to vary its obligation to make redundancy payments. While an employer may make an application to vary its obligation to pay severance payments, the onus rests on the employer to satisfy the Commission that the grounds on which it relies to justify the Commission to use its discretion. The grounds must relate to the “other acceptable employment” “obtained” by the employer for the employee, or the employer’s incapacity to pay the amount due. The Commission has the discretion to reduce the employer’s obligation to pay the employee’s entitlement to nil or to a partial amount. [14] The standards concerning s.120 (b) (i) have been dealt with in a number of decisions of this Commission. The use of the word “obtains” in s.120 (1)(b)(i) relates to action by the -- 3 of 4 -- [2025] FWC 176 4 employer to “cause acceptable alternative employment to become available to the employee,”4 and “must be the result of the conscious, intended, acts of the person concerned, as distinct from, for example, coming into possession of something by gift or inheritance.”5 [15] Further, the meaning of “other acceptable employment” has been considered; importantly “acceptable” requires that the alternative employment meets a relevant objective test. The test is not whether the alternative employment is identical, but consideration of whether the work is of a like nature, the effect of location, pay, the hours of work, workload, job security, fringe benefits, compliance with statutory conditions, seniority and the like, and not whether the employee finds the alternative employment to be acceptable.6 [16] In this matter I am satisfied that the Applicant obtained the suitable alternative employment, the work is of a like nature, the location is unaltered, pay and conditions and job security is further of benefit to the two employees. I do observe that in this matter the applications are not contested, rather the two employees support it. Order [17] In accordance with clause 37 of the Agreement and s.120 of the Act, I determine that the severance pay entitlement to Mr Oskolov who has 7 years and 10 months service is nil and for Mr Hamilton who has 2 years and 9 months service the severance pay is nil. COMMISSIONER Printed by authority of the Commonwealth Government Printer <PR783446> 1 AE522305 2 S.119(1) and the amount of severance is under s.119(2). 3 See DL Employment v AMWU (2014) 247 IR 234 [2014] FWFB at [80]. 4 Australian Chamber of Manufactures v Derole Nominees Pty Ltd,(1990) 140 IR 123. 5 FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia, [2015] FCAFC 90. 6 Re Clerks Salaried Staffs (Agriculture Award) 1999, Print S1216, 24 November 1999; Von Bibra Robina Autovillage Pty Ltd [2007] AIRC 397. -- 4 of 4 --