Redundancy payments cut despite 'inferior' job offers

Cases

Redundancy payments cut despite 'inferior' job offers

A tribunal has reduced redundancy payments for workers who were offered alternative 'inferior' positions.

A security company applied to be exempted from paying redundancy payments to several employees it had offered alternative employment to. The employees refused the offers, claiming that the new jobs were inferior to their old ones.

The Fair Work Commission reduced the redundancy payouts for three employees to below the National Employment Standards (NES) minimum amounts, but declined to completely remove the entitlements.

Facts of case


The case originally concerned six employees, but judgment was not made in respect of one of them, pending a medical assessment of his capacity to perform the new job.
 
The other five were armed security guards whose jobs became redundant when the employer lost contracts to provide security services. They were offered new jobs as security officers, albeit lower-level and less skilled positions, but the employer said it would pay them the same rate as before, including maintaining their firearms allowance. The work involved “static guarding” and the employees would no longer be armed and no longer require a firearms licence.
 
As well as the same pay, the employer claimed it would maintain continuity of service, minimum work hours were guaranteed to be higher, the jobs had a lower safety risk and they were located close to employees’ homes. For those reasons, the employer claimed it should not have to pay the employees any redundancy pay.

The employees who did not accept the new jobs claimed they were entitled to redundancy pay under the NES.

They claimed the new jobs were a downgrade from their previous positions, being less senior and requiring lower qualifications.

Three of the five employees made individual submissions, and their other claims included:
  • The overall rate of pay was less, due to different rostering arrangements.
  • They were no longer required to hold a firearms licence. If their licences were cancelled, it would harm their career and employment prospects.
  • Two employees aged in their 60s claimed that they would not be physically able to stand for the nine hours that the job required. 
  • The jobs were a setback to career progression.
  • In one case, travel distance to/from work would almost triple and require payment of extra motorway tolls.
To reduce or remove a requirement to pay redundancy pay, the employer had to provide “acceptable alternative employment”. 

Decision


The FWC found that the new jobs were, on balance, acceptable alternative employment. They provided the same pay and were still in the same industry. However, there were differences in each employee’s circumstances that resulted in a decision not to completely remove the entitlement to redundancy payments in three cases. 
 
Those employees’ concerns had some validity, although some of their claims were exaggerated. In their case, the redundancy entitlement was reduced from eight weeks’ pay to four weeks’ pay.

The FWC commented that the employer should also have done a health assessment of the two employees who claimed they could not stand for nine hours. The other two employees did not contest the employer’s claim, so the FWC granted the employer’s application to not pay them redundancy pay. 

The bottom line: Whether an alternative job is acceptable requires an overall assessment of many factors, including pay level, hours of work, recognition of length of service, non-cash benefits, workload, job security, impact on career prospects and travel distance to/from work. 

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