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Commission finds employer failed to obtain “equal alternative work” for redundant employee

In the event that an employee’s position is made redundant, employers have an obligation to consider opportunities for redeployment. Where an employer has secured “other acceptable employment” for an employee, they may be able to apply to the Fair Work Commission to reduce the amount of redundancy pay owed if the employee refuses to accept redeployment.

In the event that an employee’s position is made redundant, employers have an obligation to consider opportunities for redeployment. Where an employer has secured “other acceptable employment” for an employee, they may be able to apply to the Fair Work Commission (FWC) to reduce the amount of redundancy pay owed if the employee refuses to accept redeployment.

“Other acceptable employment” must be equal to, or on no less favourable terms and conditions than, the position previously held by the employee. Deciding whether a new role is “other acceptable employment” will involve consideration of factors such as salary, hours of work, seniority, location and job security.

In the decision of Sales Link Australasia Pty Ltd v Macourt [2022] FWC 2255, the FWC was required to consider an employer’s application to reduce the redundancy pay of an employee.  The employer claimed it had “expended considerable effort” to redeploy her into two acceptable alternative roles.

The employee was a Team Leader at Sales Link Australasia Pty Ltd (the Employer) and was primarily required to manage and lead the Sale Representatives within the organisation. Following a national restructure, the Employer notified the employee that her role was redundant, but there were two redeployment options.  

The first offer was an external position as an Independent Key Account Manager (Account Manager). While the salary and entitlements of this role remained similar to the employee’s redundant role, it was only for a 6-12-month contract and the employee was required to commute 166 kilometres to work.

The second offer was an internal position as a Sales Representative which included a significant decrease in the employee’s salary, while all other terms and conditions of her employment remained the same.

The employee rejected both offers and her employment was terminated by way of redundancy.

Before the FWC, the employee submitted that she did not have the requisite knowledge or experience of national and state accounts required for the Account Manager role. The employee also submitted that the Sales Representative role was a demotion given it was a significant decrease in salary and it was a role that she had previously supervised and managed.

The FWC agreed with the employee, finding the two redeployment offers to be notably different and involving “significant detrimental alterations” to the terms and conditions of her redundant role.

The FWC found the Account Manager role lacked leadership responsibilities and involved management of national key accounts, in which the employee lacked experience. The FWC also found that the role provided an uncertain future for the employee given it was for only a fixed term contract and was therefore not acceptable alternative employment.

Similarly, the FWC agreed with the employee finding that the Sales Representative role was “clearly a demotion” given the reduction in salary, duties and level of seniority.

Finding both redeployment options to not be “other acceptable employment”, the FWC refused to reduce the redundancy pay of the employee and dismissed the application.

Lessons for employers

This decision demonstrates the high threshold considered by the FWC when determining what is “other acceptable employment”.

Employers wishing to make an application to vary or reduce redundancy entitlements must be able to demonstrate that they obtained employment for the employee on commensurate terms and conditions compared to that of the redundant position.

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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