Redundancy; what is other acceptable employment?

The Fair Work Act provides that an employer which is liable to pay statutory redundancy under the Act may apply to the Fair Work Commission for a determination which reduces that liability in circumstances in which the employer “obtains other acceptable employment for the employee”; see sub-sec 120(1)b).

What constitutes “other acceptable employment” will often be a matter for dispute by the parties as is evident in the following extract of such a case.

The fact that the proposed role was not ‘acceptable’ to Ms Lau nor that it was not identical to her previous role does not make the proposed role not ‘acceptable’ for the purposes of section 120 of the FW Act. Nor does a proposed role cease to be acceptable merely because it is on terms that are less advantageous. 15

As was explained by Watson SDP in Feltex Australia Pty Ltd v Textile, Clothing and Footwear Union of Australia at [89]: 16

“…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.

………………………….. There are however some considerable differences between the redundant role and the alternative employment offered to Ms Lau as Administration Officer. Most relevantly the reduction in salary from $75,000 per annum to $50,000 per annum in circumstances in which Ms Lau was required to perform the same hours of work and perform duties she was already performing. It is also significant that had she accepted the alternative employment Ms Lau would be placed on a period of probation placing her employment security at risk.

There are circumstances where the FWC has found that notwithstanding a reduction in salary that an alternative role is acceptable. For example in RE Southern Cross Ceramics Pty Ltd [2013] FWC 1347 Gooley C reduced the redundancy pay obligation by 40% reflecting a reduction in hours of work for two employees by 40% on the same pay and conditions on a pro rata basis. Similarly, in Royal Society for Prevention of Cruelty to Animals in Western Australia Inc [2019] FWC 8662 Deputy President Bull also reduced a redundancy pay obligation where a reduction in annual income was accompanied by a reduction in hours of work. I note that in that case the employee did not oppose the application and that the new role had a slightly higher hourly rate of pay. In both these cases the reduction in salary was matched by a reduction in hours of work so in effect the employee was working for a similar rate of pay.

However, where the reduction in salary has not been matched by a decrease in hours of work the FWC has found that the proposed position was not acceptable employment. See for example: Stabler & Howlett Veterinary Surgeons Pty Ltd t/a Stabler & Howlett Veterinary Surgeons [2019] FWC 1208 and Triforce Staffing Pty Ltd t/a Triforce v David Hill, Casey Freeman [2018] FWC 7393.

In this case Ms Lau was expected to work the same hours of work performing duties she had previously performed for a salary much lower than what she had previously been paid to perform those duties. The reduction in salary would also have had a consequential adverse impact on other benefits such as her accumulation of superannuation savings. Her job security until she completed her probationary period was less secure. The scope of duties which she could be required to perform was reduced. Her position title was changed to one which suggested lesser seniority.

In all of the circumstances I am not satisfied that the position which was offered to Ms Lau was acceptable employment. Given I am not satisfied that the position she was offered constituted acceptable employment for the purposes of section 120(1)(b)(i) the discretion to reduce the amount of redundancy pay payable to her is not available to me.

The application is therefore dismissed.”

Application to vary redundancy pay for other employment or incapacity to pay – Real Property WA Pty Ltd ATF Real Property WA Trading Trust T/A Real Property WA – [2020] FWC 2013 delivered 24 June 2020 per Binet DP