The case of Tjoputra v Secretary, Attorney-General’s Department  AATA 1596 illustrates a “decision accordingly to law producing a result which is both unfair and unjust”. That was the unedifying description given to it by the presiding senior member of the AAT. The title to this article was actually published in the judgment.
Two employees of Object Consulting Pty Ltd (in liquidation) – described by the member as “dedicated, hard-working, long-time employees”, were denied their redundancy entitlements under the Fair Entitlement Guarantee Act 2021 (Cth) because they, generously, agreed to stay on to assist the liquidator wind up the affairs of the company.
After the business was sold and the company ceased trading, the employees were informed verbally by the liquidator that their services were no longer required by the new owners.
When the employees were ultimately given written notice of termination (in the case of one of them, after only one (1) additional business day), the company was then a “small business” for the purposes of the Fair Work Act 2009 (Cth) – with fewer than 15 employees.
Unfortunately, their employment contracts were not sufficiently clear as to establish their redundancy entitlements. The governing instrument was therefore the Fair Work Act which excludes the obligation to make redundancy payments to employees of a small business.
The senior member was clearly unhappy with this “sorry saga” but said he was bound to apply the legislation as it stood.
This outcome could have been avoided if the liquidator had terminated the employees, then taken them on a casual basis. Not doing so was very costly. Indeed, the member lamented, “Their acts of decency and loyalty, must … result in them losing their entitlements” which totalled an eye-watering $69,000.
The key take away for employees is to ensure that they seek advice when continuing their employment with a company in liquidation or, at the very least, some written assurance that their entitlements will be preserved.