Redeployment: is the offer reasonable?


Redeployment: is the offer reasonable?

Can you offer a redundant employee an alternative role that has lower pay and less favourable conditions? Paul Munro explains.


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Can we offer a redundant employee an alternative role that has lower pay and less favourable conditions? 

This question was recently sent to our Ask an Expert service.

Q Our organisation is in consultation with an employee whose position will become redundant due to an organisational restructure. We intend to offer her another position within the organisation however the only job available for redeployment is in a different location (an additional one hour’s bus trip), offers fewer ordinary hours of work resulting in a reduction in remuneration, and is a fixed 12-month term (maternity leave replacement).

We have a number of questions relating to this situation. Firstly, should the company offer this role as a redeployment despite the less beneficial employment conditions associated with the position?

Secondly, if the employee refuses the offer of redeployment is she entitled to redundancy pay?

Thirdly, if the employee accepts the offered position would she be entitled to redundancy pay at the completion of the fixed term contract?

The company employs more than 15 employees.

A The company should offer the position as the employee may find it acceptable. The employer should not presume the employee will refuse another position within the organisation, even if it is of lower status or less remuneration. The employee may find a demotion (or the offer of part-time employment from full-time) preferable to the alternative – unemployment.

If the offer is rejected, there would be an entitlement to redundancy pay as the reduced remuneration and temporary nature of the position would mean it could be considered an unreasonable offer of alternative employment.

A demotion or a change in employment conditions that are substantially less favourable to an employee will amount to a breach of the employment contract, and would therefore be a genuine redundancy. Consequently, the appropriate redundancy pay entitlement would be payable.

The employee should be advised during consultation that there would be no entitlement to redundancy pay at the completion of the fixed term contract, so she can take this into when assessing the acceptability (or otherwise) of the offered position.

What is ‘reasonable’ redeployment?

The Fair Work Act (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 unreasonable in all the circumstances for the employee to be redeployed within the employer’s enterprise; or the enterprise of an associated business entity of the employer.

While the meaning of the term “redeployment” is not defined in the Fair Work Act, it is not sufficient for  an employer to find another job within the organisation to avoid the payment of redundancy pay, unless the employee accepts the new terms of employment. Some modern awards provide for redundancy pay where the employer employs fewer than 15 employees.

In determining whether redeployment was reasonable a number of matters may be relevant, including:
  • the nature of any available position
  • the qualifications required to perform the job
  • the employee’s skill, qualifications and experience
  • the location of the job in relation to the employee’s residence and the remuneration (pay and entitlements) which is offered.
The bottom line: A position which offers less remuneration, is in a different location or is of a lower status, may not be considered a reasonable alternative offer of employment if a claim is made to the Fair Work Commission. Where an employee refuses the offer, redundancy pay would be payable.

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