Redundancy and acceptable alternate employment

Posted on February 14th, 2017

Share on LinkedInTweet about this on TwitterEmail this to someoneShare on Google+Print this page

I have previously written about ‘acceptable alternate employment’ as an element of the law of redundancy. In short, it is generally true that if an employer no longer requires a particular job to be done and terminates a worker, redundancy payments must be made.  An exception is where the employer obtains other acceptable employment for the worker – in which case it can apply to Fair Work Commission to reduce the redundancy payment that might otherwise have to be made. 

The Fair Work Commission recently considered – and refused – such an application.  The case shows that merely obtaining an alternate job for a worker is not enough, of itself, for an employer to be relieved of making redundancy payments.  The short facts were that the applicant company lost some hotel cleaning contracts to a competitor.  The applicant made arrangements for nearly 60 workers to be employed by the competitor.  It then applied to the FWC to be relieved of making any redundancy payments.

The Fair Work Commission recently considered – and refused – such an application.  The case shows that merely obtaining an alternate job for a worker is not enough, of itself, for an employer to be relieved of making redundancy payments.  The short facts were that the applicant company lost some hotel cleaning contracts to a competitor.  The applicant made arrangements for nearly 60 workers to be employed by the competitor.  It then applied to the FWC to be relieved of making any redundancy payments.

The evidence showed that almost 33% of the workers objected, on grounds which included:

  • In the new job they had to restart probation periods and therefore no longer had unfair dismissal protection, at least for a period.
  • Due to shift changes imposed by the new employer, at least two workers had been forced to resign.
  • Past service with the applicant was not recognised – which affected workers who might otherwise have been eligible for unpaid parental leave, or flexible work arrangements.

The FWC considered those changes were sufficiently serious that the new employment was not “acceptable” for relevant purposes.  Some of the employees had opposed redundancy relief solely on the basis that they lost access to accrued personal (or sick) leave due to the transfer of employment.  The FWC held that as personal leave generally is not paid out on termination of employment; and the employees knew the competitor would not recognise personal leave accruals, this was not enough to render the new work “unacceptable”.

Ultimately, the FWC permitted the applicant to reduce its liability for redundancy paid to some employees, but not all. As is common in employment related matters, the decision was heavily fact dependent.  It does however show that employers who may seek relief from redundancy obligation must carefully analyse the comparative advantages of old and new employment – it is not enough simply to find a worker a new job:  Sodexo Australia Pty Ltd t/a Sodexo [2016] FWC 4012.

Tony Cavanagh is a Director at Mullane & Lindsay Solicitors and practises extensively in Commercial dispute resolution and litigation, and employment law. If you require any assistance in these areas please contact Tony Cavanagh or contact our Newcastle or Sydney office. 

Share on LinkedInTweet about this on TwitterEmail this to someoneShare on Google+Print this page