WA Industrial Relations Commission awards increased redundancy payment

THE WA Industrial Relations Commission has awarded a significant redundancy payout to a manager who claimed she was entitled to a higher level of redundancy entitlements than she received.

The employee was made redundant soon after a new organisation took control of her employer. When she was paid two weeks redundancy for every year of service instead of 3.5 weeks which she expected, the employee brought a claim in the WAIRC claiming that under contract of employment she was entitled to a redundancy payment of 3.5 weeks’ pay for each year of service.

The employee had been with the employer for 15 years, during which time she had received a number of promotions. None of the employee’s various letters of employment contained a reference to redundancy entitlements. However, the employee argued the entitlement to a redundancy payment was an implied term of her contract, which arose out of her employer’s practice of paying all redundant employees 3.5 weeks pay for each year of service. The entitlement was similar to that set out in the enterprise bargaining agreement that covered the employer’s production workforce.

The new employer argued it was unaware of the previous employers practice of paying all redundant employees the redundancy entitlement set out in the EBA, regardless of whether they were covered by the EBA or not.

It was not until the new employer conducted further investigations into the issue that they discovered that this was the customary practice of the employer.

Senior Commissioner Beech found that the evidence of the employer’s past payment practice led to the ‘irresistible conclusion’ that there was a ‘professional practice’ within the organisation to pay all employees who were made redundant the redundancy entitlement as set out in the EBA.

Commissioner Beech concluded there was a term implied into the employee’s contract that if she were made redundant she would be paid a redundancy payment at the EBA-agreed rate and that this was a ‘benefit’ under her contract of employment for the purposes of section 29 (1)(b)(ii) of the Industrial Relations Act.

It should be noted that this case turns on its own particular facts and should not be seen as creating a precedent for automatically implying redundancy entitlements into employment contracts generally.

Carla Paratore, solicitor

9288 6940

Michael Jensen, associate

9288 6944