No severance pay for those who snub job offers

Cases

No severance pay for those who snub job offers

Redundant employees who choose to snub offers of alternative employment may find themselves out of pocket, as these cases illustrate.

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Employers often face battles over severance pay and finding suitable alternative employment, as these cases illustrate. 

Two Fair Commission cases explore the issue of redundant employees excluding themselves from entitlement to severance pay by refusing to accept suitable alternative employment.

In another matter, the issue of possible discrimination has arisen in relation to an award clause that states: redundancy payment is not to be more than what an employee would have received had the employee remained in employment until the age of 60 years.

No severance pay: fixed term contract declined
No severance pay: suitable alternative job declined
Redundancy pay limited by age – possible discrimination

No severance pay when fixed term contract declined


The applicant had been employed on a fixed term contract that was extended, but the applicant requested to have the contract converted to ongoing employment. The employer did not approve conversion of the contract because the applicant did not meet the criteria.

The applicant was offered a further fixed term contract four days after the previous contract expired. He did not accept the offer but continued to work.

The employer submitted they were not aware the applicant had not accepted the offer.

The FWC found the employment would have continued had the applicant accepted the further fixed term contract and was not entitled to severance pay.

National Tertiary Education Industry Union v Murdoch University [2014] FWC 7424 - Williams C - 23 October 2014

No severance pay when suitable alternative job declined


This was an application to reduce redundancy payments. The applicant lost a contract as a result of being unsuccessful in a tender process. An employee was dismissed as a result and the applicant submitted redundancy payments be reduced as it obtained other acceptable employment.

The employee refused to participate and was then temporarily absent.

The FWC stated that an absent employee may need to be treated differently, but it did not follow that they have greater rights or entitlements. The commission was satisfied the applicant obtained other acceptable employment and redundancy payments were reduced to nil.

Cleandomain P/L v F [2014] FWC 5243 - Gregory C - 8 October 2014

Redundancy pay limited by age – possible discrimination


A Fair Work Commission full bench will hear a matter referred to it by the Australian Human Rights Commission (AHRC) in relation to the Black Coal Mining Award.

Clause 14.4(c) in that award states that the" amount of payment due under clause 14.4 is not to be more than what an employee would have received had the employee remained in employment with the employer until the age of 60 years".

The AHRC is required to bring to the attention of the Commission any industrial instrument where it appears an act under that instrument was discriminatory.

Variation of modern award on referral by Australian Human Rights Commission [2014] FWC 7858 (5 November 2014)

The bottom line: Redundant employees can disentitle themselves to severance pay if they don't consider job offers organised by the employer that is acting to reduce its workforce.

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