Stockbroking exec offered new position: no redundancy

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Stockbroking exec offered new position: no redundancy

The Fair Work Commission has ruled a senior stockbroking executive was not entitled to redundancy pay when he declined the offer of a new position that was similar to his current role and superior in some respects.

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In a high profile case the Fair Work Commission has ruled a senior stockbroking executive was not entitled to redundancy pay when he declined the offer of a new position that was similar to his current role and superior in some respects.

[Full text of this case: Paul Heath v National Australia Bank Ltd t/as National Australia Bank (NAB) [2014] FWC 3944 – 17/06/14]
 
Deputy president Sams ruled the former chief executive of stockbrokers JBWere failed in his claim for a redundancy payment based on his transfer to a new job as part of a restructure by parent company National Australia Bank.

Background


Heath was made chief executive of JBWere in 2009, when it was bought by NAB, on a gross salary of $350,000. The role was changed in a restructure in 2013.

Heath made a claim for redundancy – arguing the conditions in the union-negotiated enterprise bargaining agreement applied. The agreement extended to senior level employees of the business.
 
He was offered a new role on a higher salary, but declined the position and filed for a redundancy payment. This was resisted by the employer on the grounds the offer was suitable alternative employment and a refusal to accept excluded the employee from redundancy payments.

Argued a demotion


Heath claimed the new position was a demotion, noting that his then current position came with a base salary of $400,000 with the potential for a short-term incentive worth $800,000. The new position offered had a higher base salary, $550,000 but a potential bonus of only the same amount.

He continued for some time as JBWere chief executive but argued the role was ‘lessened’ because he no longer had responsibility for profit and loss, strategy or project control.
 
Over the following months Heath expressed frustration at not receiving a redundancy payment. Bank management at the same time expressed concern with an information technology project that had gone beyond budget to $85 million. Heath denied any responsibility for these issues. Heath resigned a short time later.

New role found


A central limb of the bank’s case was that Heath’s position as JBWere CEO was not redundant, notwithstanding that it may have been modified, altered or changed by the restructure of April 2013. It was said the CEO role continued to exist and at no time did the Bank contemplate its abolition. Heath held that position both before and after the restructure.
Deputy president Sams commented:
"It is also curious why Mr Heath rejected the EGM role and its greater leadership component when he had earlier expressed interest in advancing his career by nominating positions he aspired to, such as the Group Executive, Wholesale Banking (responsible for $1.96 billion) and the Group Executive, Risk.
 
"Both the positions are plainly leadership/management focused, rather than sales related. I am also left to wonder why, when Mr Heath was first offered the EGM Wealth Advice role, he described it as a ‘logical’ role for him, but soon after rejected it unequivocally? …
 
"In my judgement, Mr Heath had a healthy, but rather inflated assessment of his own capabilities, skills and worth to the bank. He took it upon himself to be the best judge as to the worth of any new role he was offered.
 
"While there is nothing inherently wrong in having an exaggerated view of one’s self worth, it is not a reasonable basis to pick and choose what job you are prepared to take and insist on redundancy if none are acceptable, despite the roles being ‘comparable’ and available."
The commission concluded that by resigning his position Heath was the architect of his own future, for which the bank could not be held accountable.

The bottom line: Restructuring roles in a business does not automatically qualify employees for redundancy payments. When suitable alternative employment is offered and declined the employees effectively exclude themselves from redundancy pay entitlement.
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