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Offers of alternative employment in redundancy cases

In most cases of redundancy, employers have an obligation to consult with affected employees about the proposed redundancy and consider whether or not anything can be done to mitigate or minimise the impact on the employee, such as redeployment or obtaining other acceptable employment for the employee.

In most cases of redundancy, employers have an obligation to consult with affected employees about the proposed redundancy and consider whether or not anything can be done to mitigate or minimise the impact on the employee, such as redeployment or obtaining other acceptable employment for the employee.  

The terms “redeployment” and “obtain other acceptable employment” are often used interchangeably but derive from different sources within the Fair Work Act 2009 (FW Act). Both of these alternatives to redundancy are nonetheless quite similar and, if done properly, can serve to limit the risk of legal claims and liability for an employer under the FW Act.

Redeployment

Under the unfair dismissal provisions of the FW Act, a dismissal will not be a “genuine redundancy” if, amongst other things, it would have been reasonable in all of the circumstances for the employee to be redeployed within the employer’s enterprise or an associated entity.

Consideration of redeployment must include consideration of available suitable alternative roles into which the employee could be reasonably redeployed. If any such roles are identified, then an offer must be made to the employee for them to consider.

An employer does not need to create such a role if it does not exist but suitable alternative roles must at least be considered in order for it to be a “genuine redundancy” under the unfair dismissal provisions of the FW Act.

Obtaining other acceptable employment

Separate to the above, section 120 of the FW Act provides employers with a mechanism for applying to the Fair Work Commission (FWC) to reduce the amount of redundancy pay that a redundant employee would ordinarily be entitled to, in certain circumstances.

One of the circumstances is if the employer “obtains other acceptable employment for the employee”.

This is distinct from “redeployment” in that other acceptable employment does not need to be within the employer’s enterprise or an associated entity. Further, “other acceptable employment” requires a consideration of a number of other factors which can include (but is not limited to) the rate of pay, hours of work, location, seniority, job security, continuity of service, probationary periods and family circumstances.

The FWC has also regularly confirmed that, in order to secure any reduction, it must “obtain” the employment for the affected employee i.e. they must acquire an offer of employment and make it available for an employee to accept or reject.

For example, in the recent decision of Savco Vegetation Services Pty Ltd [2021] FWC 6239, the FWC was of the view that an employer did not actually “obtain” other acceptable employment for a particular employee, it only facilitated and assisted the potential for the employee to obtain the employment.

In that matter, the employer implemented a series of redundancies following its unsuccessful tender for a clearance and vegetation management contract. The particular employee who was the subject of the application was able to secure employment with the successful tenderer.

The evidence before the FWC was that the successful tenderer had initiated discussions with the employer about transitioning some of the employer’s employees over to work on the contract. Further, the employee had secured the employment after responding to an advertisement on SEEK and participating in an interview process.

The FWC was also of the view that the employment was not “other acceptable employment” having regard to the lower rate of pay, less attractive work location and rostering arrangements, the introduction of a probationary period as well as the loss of non-transferable employment credits based on the employee’s length of service.

Lessons for employers

When implementing redundancies, employers should approach consultation genuinely – considering any available alternatives to redundancy and, if possible, making or obtaining offers of employment for those employees.

As mentioned above, if done properly, these steps can serve to limit the risk of legal claims and liability for an employer under the FW Act.

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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