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FWC rules VIC's Print Logistics can not reduce redundancy payouts due to Covid-19

The Fair Work Commission (FWC) has heard that well-established Melbourne commercial printer Print Logistics has been severely impacted by the collapse of economic activity caused by COVID-19 and is '500-plus thousand dollars in debt.' The company was before the FWC after applying to reduce a redundancy payment to one of its workers - from about $7,000 to around $1,400. The commission has turned down this application.

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 Both employers and employees are doing it tough during this Covid-19 era, but redundancy laws still apply, says the FWC to Melbourne's Print Logistics. A company representative told the FWC: “So we’ve got no jobs coming in, basically. So we’ve got 120 grand owing, no jobs coming in, 500-plus thousand dollars in debt; on top of that, when the banks re-kickstart our repayments and our rent in the CBD, and all our machinery and - I really don’t know what position we’re going to be in. To me it seems like the business is going under.”

The application to vary redundancy pay by Print Logistics Unit Trust was made on the basis that Print Logistics did not have financial capacity to make the redundancy payment in full because of the impact of the COVID-19 pandemic.

In a statement, the FWC said: “Print Logistics sought to have the payment reduced – originally sought to have the amount of redundancy pay reduced from eight weeks to four weeks however requested a further reduction of 80% of the total amount of redundancy following the Mention Hearing on 17 April 2020. This amended request represented a reduction of $5,593.60 to $1,398.40. It was not disputed that the former employee was entitled to a redundancy payment of eight weeks pay totalling $6,992.00 – relevant award was the Graphic Arts, Printing and Publishing Award 2010.pl

“Logistics had declined rapidly as a result of the significant impact of COVID-19 and the associated lockdown and deterioration in economic activity. Commission however was not satisfied Print Logistics could not pay the amount…materials filed indicated Print Logistics had sufficient cash to pay the full amount of redundancy. It was further noted that the former employee was not a highly paid worker, making $874.00 per week which was a relevant consideration and weighed against a decision to reduce the amount .”

In his decision turning down the company’s application, Commissioner Lee noted:

[16] In a letter sent to the Fair Work Commission on 22 April 2020, the Applicant stated that it could not make the redundancy payment in full because of the impact of the COVID-19 pandemic. Relevantly:

“As a result of the coronavirus outbreak Print Logistics is currently in a difficult financial situation and has seen a huge financial downturn.

We have experienced significant payment recovery issues in accounts receivables as customer invoice payment delinquency has increased. This has had a significant impact on our cash flow and our ability to sustain our business. We have had to work with our suppliers to extend payments for materials, equipment, loans, maintenance etc. Our revenue has also decreased significantly as a result of reduced sales during this time.

… As such, we have regretfully made the decision to terminate employment of some employees …

We understand that we are required to provide a redundancy and entitlements pay-out to this employee, however we are not in a financial position at this time to afford a full pay-out. As such, we request an 80% reduction of the total amount in consideration of the current financial situation we are in. This will help reduce financial stress and avoid further detrimental impact on our business.”

Lee also noted:

[17] At the time of the Hearing the accounts payable of the Applicant were in the order of $520,000.00. Accounts receivable were in the order of $220,000.00. Approximately $214,000.00 of the $220,000.00 of the accounts receivable was overdue. Approximately $380,000.00 of the accounts payable were overdue. Consistent with that situation, numerous emails were supplied showing exchanges with the both creditors and debtors where payment terms have been renegotiated to reflect the financial pressure being felt by both the Applicant and the debtors.

[18] The bank statement supplied shows a balance of approximately $120,000.00.

[36] Based upon the material presently before the Commission, I am not persuaded that the applicant cannot pay the full amount of the redundancy entitlements to which the Respondent is entitled.

[37] The application is dismissed. An order to that effect will be issued concurrently with this decision.

The full decision is available here.

Print Logistics is a commercial printer based in Broadmeadows VIC.