The answer is in the fine print; reduced hours in tough times

I am increasingly being asked by both employers and employees who are subject to the national fair work system, whether an employer may manage tough business conditions by mandating reduced working hours upon employees. The answer, infuriatingly, is yes and no. The starting point is that an employment contract, which all employees have whether they know it or not, is a bilateral relationship, and cannot be altered without the consent of both parties. The employment contract will ordinarily consist of both written terms (perhaps a letter of appointment) and unwritten terms, with the latter consisting of both express (ie agreed) terms and implied (by custom and practice etc) terms.
That contract can be varied in two ways. The first is by agreement and the second is pursuant to an express or implied term of it. In the same way that the employer and employee can bring the contract to an end, generally by the provision of an agreed period of notice, a party to the contract can give notice of a variation, provided that the same length of notice is given. A good is example is an employee giving his or her employer notice that he or she requires a pay rise or he or she will leave. If the employer accepts the ultimatum and increases the remuneration to the demanded level, the contract is varied accordingly (or by something in between by negotiation).
Alternatively, an employer may ask an employee to accept reduced hours and thus remuneration. If the employee agrees, the contract is amended accordingly. If the employee refuses, the employer has a choice whether to accept the status quo or terminate the employment of that employee with the appropriate notice.
Of course in that situation, unless the employer is a small business (and thus exempt from statutory redundancy liabilities unless they are prescribed by an enterprise agreement or modern award), it is likely that the termination of employment will constitute a redundancy (unless the redundancy results from the ordinary and customary turnover of labour). This will be the result because the employer will have made a decision that it does not want that job (with the initial hours) to be done by anyone. Thus a refusal by an employee to accept the reduction in hours will almost always trigger a redundancy entitlement because it is unlikely that an employer in that situation will be able to convince the Fair Work Commission that the offer of reduced hours (particularly if there is any material reduction in remuneration) will constitute an offer of reasonable alternative employment.