Relocation and redundancy

Q&A

Relocation and redundancy

If suitable alternative employment is offered to an employee, the employee does not have redundancy entitlements if that alternative offer is refused.

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If suitable alternative employment is offered to an employee, the employee does not have redundancy entitlements if that alternative offer is refused.
 
A recent question to WorkplaceInfo explored this issue.
 
Our company has negotiated a new tenancy lease at premises that are located approximately 8 kilometres from our current location.
 
The new premises are located near a railway station (as is our current premises), as well as access from several major arterial roads.
 
Our expected move is in approximately 6 months. We have already notified our workforce of the change of premises but a small number have indicated their reluctance to move to the new site because of the added distance and travel time to attend work.
 
Can relocation of an employee’s workplace amount to a redundancy and an entitlement to severance pay? What are reasonable grounds for an employee to refuse to relocate in this circumstance?
 
The location of an employee’s work is regarded as an implied condition of employment and to vary this would require the employee’s agreement in the absence of a specific condition in the contract. If disputed, the reasonableness of an employee’s refusal to relocate would be determined by Fair Work Australia (FWA), based on each individual’s circumstance.
 
In determining ‘reasonableness’, factors such as extra distance or travel time are not necessarily the only considerations. Factors considered relevant by industrial tribunals when determining reasonableness on this point include:
  • the positions offered at the new location are effectively at the same level and involve similar, if not the same duties as currently occupied by the employee
  • the wage levels to be paid remain the same at the new location
  • the change in location will not affect the employees continuity of employment and their conditions of work will not change
  • there will be no change in the method of work or job security, arising from the change in location, and none of the employees functions will be downgraded
  • offers by the employer to mitigate problems with extra distance (eg free transport to the new site for a specified period or payment of a lump sum at the time of relocation if the employee chooses their own means of transport, car pooling arrangements, transport after working overtime).
 
While these factors may assist an employer in determining whether a valid argument exists against payment of redundancy pay in a particular relocation, their determination can be subjective. For example, in two separate cases before the (then) Australian Industrial Relations Commission, an employee’s refusal to relocate 40 kilometres was deemed unreasonable while, in another matter, an employee’s refusal to relocate 30 kilometres was deemed reasonable.
 
Source: Paul Munro, IR Consultant.
 
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