FWC rules on employer’s challenge to redundancy payout over ‘acceptable alternative employment’
On August 16, 2024, the Fair Work Commission (FWC) handed down a decision in a redundancy claim involving an application to vary redundancy pay under section 120 of the Fair Work Act 2009 (Cth).
This was based on the argument that the employer had found “other acceptable employment” for the two employees.
Our employee relations experts examine the case and what it means for businesses.
Case facts
The employer, Job Site Recyclers Pty Ltd, applied to vary redundancy pay to zero as they believed they had obtained “other acceptable employment” in another business for two employees, Ms Pereira and Mr Khatri.
The employer had actively engaged with another business in the industry who did similar work to theirs to find these roles as an alternative to making both redundant.
The new role performed by Ms Pereira was similar to her previous role with the old employer. Namely it was administrative, in the same industry, close to equivalent pay, with the location not disproportionately far from her home.
Ms Pereira complained the new role was in a “dirty work environment” in an office building close to the industrial warehouse and machinery.
She had previously worked in an administration office located away from the recycling facility. She also cited an unprofessional work culture in the new role and stated that the new working conditions were loud and disruptive. Furthermore, she said her co-workers were confrontational and inappropriate, and that the processes, systems and software were all different to her previous role.
The new role performed by Mr Kahtri was in the same industry, in a similar job, and had an increased remuneration, however this was offset by the fact that he worked fewer hours.
The location of the job was 6 kilometres further away from his home, which the Commission accepted did not make the new job objectively unacceptable. Mr Khatri perceived that the reduced responsibility in the new role and the requirement to learn new software and systems was a demotion.
Mr Khatri reported experiencing intimidating behaviour from co-workers in the new role and supplied evidence of one text exchange. The Commission found this was insufficient to make an objective assessment of whether the interactions would make the role unacceptable. Mr Kahtri also raised concerns about a dirty work environment.
The decision
The FWC ruled that Job Site Recyclers Pty Ltd could reduce the redundancy entitlements by 70%, finding that the new roles did meet the objective test required. The employer did obtain other acceptable employment for both employees.
In the case of Ms Pereira, the dirty environment and the change in workplace culture did not make the job objectively unacceptable. The location with the previous employer was still near the recycling facility and therefore would have had some noise and dust.
In the case of Mr Khatri, the less satisfactory elements of a distant work location, perceived demotion, dirty work environment, and interactions with co-workers, must be balanced against objectively acceptable factors of working the same task for slightly increased remuneration in the same industry.
The Commission did not accept Mr Khatri’s perceived demotion as the role was a similar job to what Mr Khatri previously held. Furthermore, the need to learn new systems and processes in a new company was unsurprising and is experienced by every person who moves employment in these circumstances.
Key takeaways
The Commission, when considering whether to vary redundancy pay, examines the lengths the employer took to obtain the new employment against the disadvantages of the different work environment.
Acceptable employment refers to not unreasonably removing the employees’ original duties and other terms and conditions of employment. Whether there is sufficient correlation between the current work and alternative employment proposed is also assessed.
Considerations for other acceptable employment:
- The test is not whether the employee can perform or carry out the new employment but whether it is an acceptable alternative in all the circumstances;
- This is not based on whether the new employment is subjectively acceptable to the employer or employee;
- Factors relevant to acceptability include nature of the work, pay, working hours, skills, duties, seniority and location.
Due to the complexity of the redundancy process CCIWA strongly recommends that employers contact the Employee Relations Helpline on 08 9365 7660 or via [email protected] to seek further advice prior taking any action.
