The Full Bench of the Fair Work Commission (FWC) have clarified that the FWC has no power to reduce redundancy entitlements provided for in industry-specific redundancy schemes under modern awards. Section 120 of the Fair Work Act 2009 (Cth) (‘the Act’) grants the FWC power to reduce an employee’s redundancy pay as appropriate where an employer cannot afford to pay the proper amount. In a recent case the FWC relied on this provision of the Act and reduced the redundancy pay of an employee to nil. The decision was overturned on appeal as the Full Bench found that section 120 only applies to redundancy pay awarded in the National Employment Standards. In this instance, the employee was covered by the Building and Construction General Onsite Award 2010 which contained an industry-specific redundancy scheme. Therefore, the FWC did not have the power to reduce the redundancy pay. The decision demonstrates the need for employers to consider an applicable modern award or enterprise agreement which may provide employees with distinct redundancy entitlements, separate from the NES. Contact M+E for further information and assistance with your employment matters.


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