Redeployment due to redundancy — issues to consider

Analysis

Redeployment due to redundancy — issues to consider

The issue of redeployment of an employee can arise when a position or a section of the employer’s business becomes redundant.

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The issue of redeployment of an employee can arise when a position or a section of the employer’s business becomes redundant.

While redeployment may be a viable option for both the employer and the affected employee when the current position is redundant, there can be some issues relating to this arrangement. Problems arise where the job offered in the redeployment is considerably different to the current position.

The factors taken into account by Fair Work Australia (FWA) regarding the reasonableness of any proposed redeployment in relation to a redundancy are similar to those considered in a matter relating to other acceptable employment.

In the absence of an agreement with the employee regarding the offer of another position within the organisation, the position made available to the employee in a redeployment must be acceptable, in the absence of the employee’s agreement, in order for the employer to defend a claim of unfair dismissal.

Meaning of ‘redeployment’
 
The Fair Work Act 2009 (s389(2)) contains a provision that an employer cannot rely on the ‘genuine redundancy’ provisions in order to avoid a claim of unfair dismissal unless it would have been reasonable in all the circumstances for the employee to be redeployed either elsewhere in the employer’s business or in an associated business entity.

While the meaning of the term ‘redeployment’ is not defined by the Act, the term can be broadly defined to mean the transfer of an employee to another job within the same organisation or an ‘associated entity’.

Associated entity
 
This term is defined by s50AAA of the Cth Corporations Act 2011. Generally, a business is ‘associated’ if it is legally related to the principal business, if the principal controls it, has a qualifying investment, significant influence or material interest in it; or, alternatively, if the associate is in a similar position in relation to the principal entity.

Employee required to reapply for a position
 
There is a relevant provision regarding redeployment under the Fair Work Act. Part 2-2 Division 11 SubDivision B covers entitlement to redundancy pay under the National Employment Standards (NES): see s120.

An eligible employee is entitled to receive redundancy pay in the event of a genuine redundancy. ‘Genuine redundancy’ is defined as when the employer no longer requires the job to be performed by anyone. Fair Work Australia (FWA) has previously ruled that giving employees the opportunity to apply for other jobs by competing with other job applicants does not amount to ‘redeployment’ because it is not a guarantee of another job. See: Ulan Coal Mines Limited v A. Honeysett & Ors [2010] FWAFB 7578.

Suitability of offered position
 
In offering redeployment to an employee as an alternative to redundancy, industrial courts and tribunals have generally considered factors relating to the acceptability of the alternative employment include pay levels, hours of work, seniority, fringe benefits, workload, job security, and whether the offered position involves relocation of the employee.

Where the redeployment involves work requiring different skills or knowledge, an adequate period of training should be offered to the employee as a condition of the redeployment.

If an employee accepts redeployment, the employer should be careful in avoiding any hint of duress or influence in the employee’s position to accept redeployment, particularly where the offered position is lower-paid and/or of a lower-level status.

However, as part of the consultation, the employer should offer a suitable position to an employee regardless of its pay level or status, even if the employer presumes the offer will be rejected by the employee. An employee may view a lower-paid or lower status position as an attractive alternative to unemployment. In other words, the employer should not presume an employee will reject redeployment because of a perceived unsuitability of the proposed job.

In considering redeployment in a particular matter, FWA observed that the objective test under the Fair Work Act should not be read narrowly. It determined that it did not believe the words in s389(2) of the Act are intended to confine redeployment options only to roles that are the same as the position that the employee occupied at the date of redundancy. In this case, the employer did not offer a position of ‘assistant accountant’ to a long-serving employee employed as the accountant, where the employee indicated they were prepared to accept the lower paid and lower status of the position as an alternative to unemployment. See: Gim Pheng Ho v A.P. Eagers Limited [2010] FWA 5897.

Refusal to accept redeployment
 
An employee who refuses redeployment in circumstances where the proposed position is deemed acceptable may jeopardise an entitlement to redundancy pay. In a matter before FWA, it ordered no redundancy be paid to three nurses who refused redeployment to other wards after the paediatric ward was shut down. The work offered as an alternative to redundancy was considered acceptable, particularly because the redeployment program offered by the employer to the nurses included three months of supernumerary training in the new ward, maintenance of hours worked, maintenance of roster patterns, financial support for more training and a commitment to ongoing permanent employment, all at the same location as the original job. See: Healthscope Limited v Austin & Ors [2011] FWA 5599

Modern award provisions
 
The provisions in modern awards can impact on redundancy and redeployment.

Consultation
 
The redundancy provisions in modern awards generally require the employer to consult with affected employees when a decision has been made that will have a significant effect on the employees (eg redundancy).

The consultation process should be used to investigate possible alternative employment within the organisation and discuss available options with the affected employee(s).

Transfer to lower-paid duties
 
The redundancy clause in a modern award may provide that where an employee is transferred to lower paid duties by reason of redundancy the same period of notice must be given as the employee would have been entitled to if the employment had been terminated and the employer may, at the employer’s option, make payment instead of amount equal to the difference between the former ordinary rate of pay and the new ordinary time rate of pay for the number of weeks of notice still owing. Examples of such a provision include cl 23.6 of the Manufacturing and Associated Industries and Occupations Award 2010 and cl 14.2 of the Clerks — Private Sector Award 2010.
 
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