Redundancy pay variations for other employment

The Fair Work Commission has the power to vary the amount of statutory redundancy pay in circumstances in which an employer obtains other “acceptable” employment for an employee whose job has become redundant. Here are the principles.

“Relevant principles

[48] The critical issue in this matter is whether the alternative position was “acceptable”.

[49] It is well established in this jurisdiction that the concept of acceptable alternative employment is to be determined objectively. It is not a question of subjective opinion; such as whether the employer believed it acceptable or whether the employee considered it unacceptable. As noted by the Full Bench in Australian Chamber of Manufacturers and Derole Nominees Pty Ltd: 7

“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 like nature; the location being not unreasonably distant; the pay arrangements complying with award requirements. There will probably be others.”

[50] The onus of establishing that the alternative employment in question is acceptable rests with the applicant employer 8. It is a serious step for the Commission to make an order to limit or remove an employee’s statutory entitlement to redundancy payments.9

[51] In order to establish whether the alternative employment obtained by the employer is acceptable, it is necessary to have regard to all relevant matters including (non-exhaustively) factors such as pay levels, hours of work, seniority, fringe benefits, workload, job security, location and travelling time. 10

[52] It is also clear that acceptable employment does not mean identical employment; however, it has been held by the Commission that:

“…the objective test of acceptability appears to be that the alternative work bears a sufficient comparability to the original work and is not unreasonably removed from the employee’s original duties, skills set, qualifications, experience and other terms and conditions of employment. The test is not whether or not the employee is capable of carrying out the new employment as such, it is whether there is sufficient correlation between the relevant indicia of the current work and the alternative employment as proposed.” 11

[53] Further, employees should not unreasonably refuse offers of alternative employment merely because they wish to access the benefits of redundancy pay. 12

[54] If the Commission is satisfied that acceptable alternative employment has been obtained, a discretion then arises (but only then) to reduce all or some of the redundancy pay having regard to the relevant circumstances. 13

Northpoint Fleurieu Pty Ltd (2020) FWC 6521 delivered 8 December 2020 per Anderson DP