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Social Security Payments Not an Alternative Remedy It has been held that payments under the social security system are an alternative to the payment of compensation or severance pay. This is because social security payments are not specific to severance payments, where an employee loses non- transferrable benefits such as long service leave. The AIRC noted that Australian practice is for severance pay to be available regardless of an employee being entitled to Social Security. If it had been found that the payments were an alternative, the AIRC would have been constrained from arbitrating the matter to award severance pay. Potential impact on employers business: Section 392(2)(a) of the FW Act requires FWA to take into account the effect of a compensation order on the viability of the employers business when determining the amount of compensation to award. Viability is not defined, but refers to the likely financial impact on the business and, in particular, whether it could affect the business ability to continue trading. Therefore, the size, turnover and current financial position might be taken into account and amounts of compensation may be reduced if the impact on the business is likely to be substantial. Potentially, FWA could decide not to award any compensation at all if it felt that a payment would severely affect the business. In Georgiadis v Powerlab Pty Ltd (2005) EOC 93-378, compensation payable to an employee who had been unfairly dismissed was discounted by 25% after taking into account its potential impact on a small business. The employer had only five employees at the time, and the AIRC reduced the compensation amount from $7,553 to $5,665. Other factors to consider As well as the factors already discussed, s 392(2) of the FW Act requires FWA to take the following factors into account when determining amounts of compensation to award in the unfair dismissal context: The employers length of service with the employer The amount of remuneration earned by the employee from employment or other work during the period between the dismissal and the making of the compensation order The amount of income reasonably likely to be so earned by the employee during the period between the making of the compensation order and the actual compensation, and Any other matter that FWA considers relevant. The second and third factors were inserted into the legislation by the Fair Work reforms and were not a feature of the Work Choices legislation. The final factor gives FWA broad discretion in its determination of the appropriateness of a remedy.

Social security payments not an alternative remedy