Refusal to accept alternative employment reduces employee’s redundancy payment

Refusal to accept alternative employment reduces employee’s redundancy payment

When an employer faces reductions in sales and revenue, the likely consequence is a reduction in the composition of the workforce and the triggering of redundancy payments to employees who lose their jobs. However, in some situations, the employer may be able to offer alternate employment, which, if found to be acceptable, maintains an employee’s continuity of service without involving the payment of redundancy.

A recent case before Commissioner Jennifer Hunt highlights the factors that the Fair Work Commission will consider when determining if a separate employment offer is deemed acceptable in the circumstances.

The employee, Mr V, had been employed as a Sales Consultant with a vehicle dealership, Torque Ford, in the north of Brisbane for 19 years. At various times, he had worked at both Torque Ford and Torque Honda, which are located next to each other at North Lakes. The dealerships are part of the Eagers Automotive group of businesses.

Due to the pandemic and a global shortage of new vehicles, there were limited sales opportunities and increasing lead times for delivery of new vehicles at the dealerships.

Eagers’ management met with four consultants, including Mr V, in September and October 2021, seeking a volunteer to relocate to another dealership. With no volunteers coming forward, a skills matrix was developed, with Mr V being selected as the employee to be made redundant.

On 15 October 2021, Eagers met with Mr V and offered him a role at another dealership at Aspley, which they considered was suitable alternate employment, as it was the same position title, had the same tasks and duties, the same remuneration and a company car provided. They estimated it would involve Mr V travelling an additional ten minutes each day from his home to work, although Commissioner Hunt believed the travel time was closer to twenty minutes.

He declined the offer.

On 21 October 2021, Mr V was offered another redeployment opportunity at Torque Honda for a three-month period due to an employee being off work due to a personal injury. There was no guarantee of a permanent position. This offer was also declined.

On 22 October 2021, he was issued with a termination letter and advised that the company did not intend to pay his redundancy entitlement of 12 weeks as he had refused `acceptable employment’.

In summarising what constitutes `acceptable employment’ in these situations, Commissioner Hunt noted:

  • It does not mean identical employment, as no two jobs are the same;

  • An employee must meaningfully cooperate with the employer in exploring options;

  • If an employee refuses a role, it may place their redundancy entitlements at risk;

  • If there is more than one employee affected, each situation must be considered individually.

Regarding the first offer made to Mr V, Commissioner Hunt determined that the additional travelling time “would have been inconvenient and onerous”. Consequently, she considered that the Aspley role was not other acceptable employment for Mr V.

However, she determined that the second offer at Torque Honda was acceptable alternative employment. As she noted, “There was no difference in the duties he was required to perform, his remuneration was the same, and the location almost identical”. She advised Mr V that in the event of him not being offered a permanent position and being made redundant, he’d be in the same position and eligible to receive his full severance.

Consequently, Commissioner Hunt exercised her discretion and reduced Mr V’s redundancy payment from 12 weeks’ pay to 4 weeks’ pay.

Eagers Automotive v TV [2021] FWC 6602 (14 December 2021)

For questions about redundancy, alternate employment, or other employment questions, please contact Dean Cameron at Workforce Advisory Lawyers – We Know Employment Law on 1300 925 529, 0417 622 178 or via email to dean.cameron@workforceadvisory.com.au

Disclaimer: This information is provided as general advice on workplace relations and employment law. It does not constitute legal advice, and it is always advisable to seek further information regarding specific workplace issues. Liability limited by a scheme approved under professional standards legislation.

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