In a recent decision the Fair Work Commission reduced redundancy pay by 50% for an employee who refused to drive an extra 30 km per day for a higher-paying redeployment position.
The Facts
The employee was a Warehouse Operations Manager at the employer’s Brunswick facility. He was 56 years old and had worked there since 2007.
The employer decided to close the operation in Brunswick and relocate to Laverton making his role in Brunswick redundant. Upon redundancy termination the employee would have been entitled to 12 weeks’ severance pay.
To retain the employee’s experience the employer offered to relocate him to Laverton with:
- a 10% salary increase,
- a $1000 a month car allowance, and
- a further $400 monthly petrol allowance.
After the employee refused the offer the employer applied to the Fair Work Commission under section 120 of the Fair Work Act to reduce the redundancy pay entitlement.
About the Act
Section 120 of the Fair Work Act allows an employer to apply to the Fair Work Commission to reduce or eliminate an employee’s redundancy pay entitlement if the employer:
- obtains “other acceptable employment” for the employee, or
- is unable to pay the full redundancy amount.
In deciding if “other acceptable employment” was obtained the Fair Work Commission can consider all the circumstances, including factors such as:
- pay levels,
- hours of work,
- seniority,
- workload,
- job security,
- location,
- travelling.
The Commission must also decide if it is “appropriate” to make an order to reduce the redundancy pay.
The Decision
The Commissioner found that the employer had obtained acceptable alternative employment where:
- Although an additional commute of 30 km a day would have some impact on the employee it was not unreasonable considering the additional car and petrol allowances.
- There was no evidence that the employee’s age or health were factors for why he would not be able to work in Laverton.
- The Laverton position was sufficiently comparable to the original work in terms of duties, skillset, qualifications, experience, and other terms and conditions.
The Commissioner also found that it was appropriate to reduce the amount for redundancy pay though not to nil, where:
- The employee had lost a position he had held for 18 years.
- He may not have been made aware that in refusing the transfer he could be putting his redundancy at risk.
- He had been given an indication that he would be “looked after”.
- He had cooperated with the company in exploring and considering options for alternative positions.
The Commissioner decided to reduce the redundancy payment by 50%.
Implications
Employees who are made redundant should be aware that employers can apply to reduce redundancy payments on grounds that an offer of ‘other acceptable employment’ has been made. Employees should be careful to ensure they have supporting evidence for their reasons for disputing that an offer was ‘acceptable’.
Employers should be aware that an application to reduce redundancy payments will be closely scrutinised as the Fair Work Commission will take into account all the relevant circumstances.
At WorkLegal our experienced team can answer your questions and put you on the right track. A range of fixed-price Initial Consultations will suit most people’s needs in quickly learning what their options are.