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Application to vary redundancy pay dismissed

The entitlement to redundancy pay under the National Employment Standards of the Fair Work Act 2009 (Cth) is one which is intended to minimise the adverse impact of a redundancy on affected employees, such as loss of job security and the potential difficulties associated with obtaining new employment in the open market.

The entitlement to redundancy pay under the National Employment Standards of the Fair Work Act 2009 (Cth) (the FW Act) is one which is intended to minimise the adverse impact of a redundancy on affected employees, such as loss of job security and the potential difficulties associated with obtaining new employment in the open market.

However, where an employer has taken additional steps to minimise that adverse impact by obtaining “other acceptable employment” for the employee, section 120 of the FW Act provides a mechanism for those employers to apply to the Fair Work Commission (the FWC) for an order to vary (or reduce) the amount of redundancy pay owed to the employee.

It should be noted though that this mechanism is only available to employers if they have actually “obtained” the other acceptable employment for the employee. It is not sufficient that an employer facilitates or assists an employee in applying for another position.  

The FWC has recently ruled on an application made pursuant to s 120 of the FW Act, ultimately finding that an employer had not “obtained” other acceptable employment for a number of employees after their positions had been made redundant.

In Ready Workforce (A Division of Chandler Macleod) Pty Ltd T/A Chandler Macleod [2022] FWC 1352, the employer implemented the redundancies of 12 licensed truck drivers (the workers) following its unsuccessful bid for renewal of a tender to provide labour at a coal mine.

Between the period of October 2021 and November 2021, all except one of the workers gradually finished their employment with the employer and began working for the labour hire company that had won the tender (the new tenderer).

The employer subsequently made an application to the FWC to have the workers’ entitlements to redundancy pay reduced to nil on the basis that it had obtained the alternate employment with the new tenderer.

The employer submitted that it had obtained the workers’ employment with the new tenderer through means such as:

  • providing the workers with details of information sessions hosted by the new tenderer as well as links to the new tenderer’s website;
  • providing a list of the workers’ names to the new tenderer;
  • providing paid overtime for the workers to attend the information sessions and job interviews hosted by the new tenderer;
  • facilitating the sharing of training and other records; and
  • offering CV writing support and interview preparation services.

The Construction, Forestry, Maritime, Mining and Energy Union (the Union),on behalf of the workers, opposed the application on the basis that the employer did not secure the alternate employment for the workers. The Union submitted that instead, the workers were left to their own devices in the open market to apply for and obtain the employment themselves.

In reaching its decision, the FWC found that the actions of the employer did not support a finding that it was the primary means by which the alternate employment of the workers was secured.

The FWC had regard to the fact that the employer did not negotiate or come to any “agreement, commitment or other arrangement” with the new tenderer that would suggest assurance of the workers’ employment.

The FWC found that this lack of obtainment was further reflected in the fact that one of the workers had unsuccessfully applied for employment with the new tenderer, demonstrating that the new tenderer maintained the unfettered option to either engage or to not engage the workers.

The FWC was of the view that the actions taken by the Employer were the “facilitation and assistance for potential employment” as opposed to “obtaining other employment” for the workers. In this regard, the FWC warned that in order to satisfy the requirements of s 120 of the FW Act, an employer must do more than merely “facilitate and assist employees to participate in a recruitment process in the hope that they receive offers of employment”.

For the reasons set out above, the FWC held that the Employer had not satisfied the requirements of s 120 of the FW Act in that it had not secured or obtained the workers’ employment with the new tenderer. The FWC therefore dismissed the application, finding each of the workers’ redundancy entitlements remained.  

Lessons for employers

When applying to the FWC to vary the redundancy pay of an employee, employers must be able to demonstrate that they have actually obtained other acceptable employment for the employee.  

As seen in this decision, when assessing whether an employer has “obtained” employment for the impacted employee, the FWC will look for some form of guarantee, commitment, or assurance that would suggest that the alternate employment was secure, removing the need for the employee to apply for and obtain the role by themselves.

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.

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