Printer fails in Covid redundancy cut bid
Melbourne-based commercial and display operation Print Logistics has failed to convince the Fair Work Commission its dramatic drop in revenue from Covid should enable it to cut its redundancy payouts.
The ruling will leave many print businesses in similar situations facing difficult choices. Redundancy is expensive, especially for long serving staff. But, keeping staff on, even with JobKeeper, means it could be even more expensive to release staff when JobKeeper ends, as accruals tot up.
Printers without cash reserves are finding themselves between a rock and a hard place, with no money for redundancies but facing a growing bill for when JobKeeper runs out and staff have to be let go.
Print Logistics had sought to have an initial redundancy payment of $7000 under the Graphic Arts, Printing and Publishing Award 2010 reduced to first $5600, and then to $1400, citing no work, large debts and a moratorium on its rent, machinery and bank loans about to end.
A spokesman for the company told the FWC hearing that, “So we’ve got no jobs coming in, basically. So we’ve got 120 grand owing, no jobs coming 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.”
However, the application was refused. In its ruling, the FWC said, “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 per week which was a relevant consideration and weighed against a decision to reduce the amount.”
The employee, Sophida Karwa, had been with the business for four years. She was supported by AMWU. The union suggested taking Karwa back under JobKeeper, but the company demurred, saying it was only delaying the inevitable.
The spokesman for Print Logistics told the hearing, “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 per cent 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.”
The Commissioner said, “Given my findings, there is no basis for the exercise of a discretion to reduce the redundancy entitlement under the terms of s.119 of the Act.”
The AMWU was also keen to ensure the payout remained at the statutory level to protect its member should the company go bust, meaning she would get the full amount from the Fegs scheme. FWC agreed.