A Tasmanian cheese producer and tourism operator has failed in its attempt to avoid paying $24,000 in redundancy entitlements to two former employees made redundant in June.
Coal River Farm took the matter to the Fair Work Commission claiming "it cannot pay" due to a downturn in trade caused by the coronavirus pandemic.
The two men - one who worked in the restaurant, the other in the Coal River operations - were informed of their redundancy in May, and Coal River Farm made an application with the FWC on May 13 to reduce the redundancy payment to nil. The FWC requested detailed financial information, but the business missed the first deadline.
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It filed documents on June 5, and further information on June 16, before the director and two employees were required to give evidence on June 22.
Coal River Farm claimed it had suffered an 80 per cent reduction in revenue and cash flow, had a "sizeable debt" to the Australian Taxation Office and would not be profitable for at least six to 18 months.
The business was in the process of opening stores in Perth and Fremantle before the pandemic, which it is continuing with, claiming it could become insolvent if they failed to open. The company was in the process of recruiting a store manager.
The documentation included an ATO extract, a profit and loss statement, and screenshots of a banking portal and bills.
In his evidence, the company director told the FWC "it's another cost which is going to cost - like, we just can't afford to pay".
The two employees claimed this documentation was insufficient to prove Coal River Farm's financial position, with one saying it failed to take into account JobKeeper payments, the documents were not signed by an accountant and did not include grants or tax incentives.
The FWC was told that the two men would struggle to find new employment.
In her decision, Commissioner Tanya Cirkovic found that the business had suffered a decrease in revenue and profit, but no evidence was provided regarding JobKeeper.
She said the banking and bills screenshots did not provide the required insight.
"I also have regard to its aspiration to open two new stores and employ staff in those stores. I also note that the P&L Statement, whilst showing a decline in profit up to 14 June 2020, is nevertheless showing a gross profit," Commissioner Cirkovic found.
"The document itself, as conceded by [the director], does not contain the complete month of June and does not reflect JobKeeper wage subsidy payments.
"The evidence before me as to the Applicant's complete financial position, is, in my view, insufficient to establish an incapacity to pay."
Whilst she acknowledged the difficult financial circumstances facing Coal River Farm, the application to avoid paying redundancy entitlements was dismissed.