QLD Redundancy & Associated Entities

[Associated Entities]

Hi,

I have been made recently redundant and only paid two weeks noticed with an additional 4 days.

My question is two fold.

Firstly "Company A" the umbrella company has not paid a redundancy due to having only 5 staff so I think have classified themselves as a small business with <15 staff members and not required to pay a redundancy however they have three other associated entities which is what I think they are as my manager directs the managers of Company B, C and D which altogether have >15 staff.

As well as part of my last six months of work I have had 4 shifts a month in company B without being paid by Company B but still being paid by Company A.

Also in my termination meeting my manager brought in a balance sheet of Company B to show me the losses it is making and having to make contributions to sustain it.

My question is am I correct in assuming Company B, C and D are associated entities?

My next question is I started salaried employment in Company C in 2014 and then moved to Company A in 2016 should my redundancy be counted from 2014 or 2016 as I was also doing parts of my final role in 2014 due to Company A not having the budget at the time to have my role full-time?

Thanks for any help in advance in clarifying my position as I don't want to go to my previous employers with the wrong information.

 

[Rod]

1. Quite likely, but it doesn't help you for redundancy purposes. It would have helped if you had been unfairly dismissed.
2. Probably, but the small business exception kills your claim.

 

[Associated Entities]

Hi Rod,

Thank you for your reply.

Are you indicating the Associated entities do not quantify the number of staff to being over 15 so I am not eligible for the 7 weeks Redundancy?

On another note my annual leave was taken from Company B to A which is another reason why I think of all the companies being associated entities.

Cheers,

Alwyn

 

[Rod]

Are you indicating the Associated entities do not quantify the number of staff to being over 15 so I am not eligible for the 7 weeks Redundancy?

Yes. Associated entities applies to leave entitlements, not redundancy.

On another note my annual leave was taken from Company B to A which is another reason why I think of all the companies being associated entities.

Yes, understood, unfortunately as mentioned above, this doesn't matter from a redundancy viewpoint. Something I suspect your employer knew about.

 

[Associated Entities]

This what i found of the Fair work website

Employees of small businesses
A small business is one that employs fewer than 15 employees. Some small businesses don’t have to pay redundancy pay when making an employee redundant.

To see if small businesses need to pay redundancy pay, select your industry in Redundancy pay and entitlements.

To figure out whether the business is a small business, count all employees employed at the time of the dismissal including:

• the employee and any other employees being terminated at that time
• regular and systematic casual employees employed by the business at the time of the redundancy (not all casual employees)
• employees of associated entities, including those based overseas.

The size of the business is counted the earliest of:

• when the employee is told their employment will be terminated, or
• when the employee is given their notice of termination.

Source reference: Fair Work Act 2009 s.23, 121 and 123

 

[Associated Entities]

After a bit more googling I found this, what are your thoughts Rod? Hopefully it put more weight behind my assumption/s.

'Associated entity' provisions

The crucial issue in this instance is whether the other companies in the group are determined to be associated entities for the purposes of the Fair Work Act (FWAct).

The FWAct (s.12) defines an 'associated entity' to have the meaning given in the Corporations Act 2001[Cth] (s.50AAA). FWA has determined that the question of associated entities is contemplated by the definition of 'control' in the Corporation Act (s.50AA).

Control includes direction or influence over the operations of the associated entity or entities. The section sets out in some detail a range of indicia indicating an 'associated entity'.

Meaning in Corporations Act

The meaning of 'associated entities' in the Corporations Act is satisfied:

• if the associate and the principal are related bodies corporate
• if the principal controls the associate
• if the principal has a qualifying investment in the associate, and the principal has significant influence over the associate, and the interest is material to the principal
• if the associate controls the principal, and the operations, resources or affairs of the principal are material to the associate
• if the associate has a qualifying investment in the principal, and the associate has significant influence over the principal, and the interest is material to the associate
• if an entity (the third entity) controls both the principal and the associate, and the operations, resources or affairs of the principal and the associate are both material to the third party.

Note that one entity (the first entity) has a qualifying investment in another entity (the second entity) if the first entity has an asset that is an investment in the second entity, and has an asset that is the beneficial interest in the second entity and has control over that asset.

 

[Rod]

Hmmm, apologies, I missed s23(3) so it appears the associated entities may need to be considered for an employee count.

To find out if the other businesses are associated entities the test now changes to the definition in the Corporations Act s 50AAA as you mentioned. You are better placed to answer this question. Your description of events tends to point towards the companies being associated entities but without ASIC searches and names of people I'd not comment on this part.

And if you are covered by a modern award you need to consider whether there are any terms in the modern award relating to redundancy and how it may apply to you. Same applies if there is an Enterprise Agreement in place rather than a modern award.

So if you are happy the companies are associated entities, and a modern award or EA doesn't change your entitlement, then you should be received more than what the employer has offered.

Keep in mind the employer can apply to the FWC to vary (read lower) this amount if they say they cannot afford to pay (s120 FWA).

 

[Associated Entities]

Not a problem, just happy to have someone with more knowledge to confirm my suspicions.

I still have a good relationship with them and don't want to spoil it by taking the wrong information to them plus they also had somewhat of a role in putting a good word in my getting another job.

In regards to unable to pay they do have three other entities as well as that was not mentioned in my redundancy and I would also assume my than just myself would have been made redundant but we will see.

I think the main cause they haven't paid was due to not taking into account the associated entities and think I would not question the fact.

 

[Rod]

Agreed, sometimes getting a good reference is more important than a couple of weeks of pay.