Redundancy entitlements and the Fair Work Act

The Fair Work Act permits an employer which has obtained “other acceptable employment” for an employee who has had his or her employment terminated due to redundancy to apply to the Fair Work Commission to have the payment otherwise due as redundancy pay reduced or eliminated.

How does the Commission assess whether the employment which has been offered to the employee via this process qualifies as ”other acceptable employment”

Here is the answer from a recent Fair Work Commission case.

It is well established that the question of whether the position offered was acceptable alternative employment must be determined objectively and that the mere rejection of the alternative employment does not make it objectively unacceptable.

[22] The Full Bench in Australian Chamber of Manufacturers v Derole Nominees Pty Ltd 1 (Derole Nominees) considered what constitutes ‘acceptable alternative employment’ and held:

“What constitutes ‘acceptable alternative employment’ is a matter to be determined, as we have said, on an objective basis. Alternative employment accepted by the employee (and its corollary, alternative employment acceptable to the employee) cannot be an appropriate application of the words because that meaning would give an employee an unreasonable and uncontrollable opportunity to reject the new employment in order to receive redundancy pay; the exemption provision would be without practical effect.

Yet, the use of the qualification ‘acceptable’ is a clear indication that it is not any employment which complies but that which meets the relevant standard. In our opinion there are obvious elements of such a standard including the work being of a like nature, the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.” 2

[23] As put by Watson SDP in Feltex Australia Pty Ltd v Textile, Clothing and Footwear Union of Australia 3:

“[89] I accept the proposition advanced by Feltex Australia that acceptable alternative employment is not necessarily identical employment and that the AIRC has previously found alternative employment to be acceptable notwithstanding inconvenience to employees and some detrimental alteration to the terms and conditions of employment.”

[24] In a similar vein the Full Bench in Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd 4 found that the determination of whether alternative employment is acceptable will involve a consideration of such matters as pay levels, hours of work, seniority, fringe benefits, workload and speed, job security and other matters including the location of the employment and travelling time.

[25] In Sodexo Australia Pty Ltd T/A Sodexo 5, Deputy President Sams considered various authorities in respect of the question of what constitutes ‘other acceptable employment’ and helpfully summarised the principles in the following terms:

“•  the test of what constitutes ‘acceptable employment’ is an objective one. It does not mean it must be acceptable to the employee.

  • ‘acceptable employment’ is not identical employment, as no two jobs could be exactly the same.
  • an employee must meaningfully cooperate with the employer in exploring or considering options for alternative positions.
  • an employee’s prima facie entitlement to redundancy pay may be at risk if the employee refuses a role or position, which is found to be objectively ‘acceptable’.
  • the acceptance of alternative employment by one or more persons in a group of redundant employees does not necessarily make the alternative employment ‘acceptable’ for all of them. Each employee’s individual circumstances must be taken into account.
  • There are a range of factors of varying weight, according to an employee’s particular circumstances, which may be taken into account to assess the acceptability of alternative employment.” 6”

ASG Maintenance Pty Ltd v Robert Lord (2020) FWC 5894 delivered 4 November 2020 per Dean DP