Often employees enquire about whether their position is redundant when their employer changes their role.
The basic amount of redundancy pay that an employee is entitled to is set out in the Fair Work Act 2009 (Cth).¹ Depending on whether an enterprise agreement applies to them, or the terms of their contract of employment, employees may be entitled to additional redundancy pay.
Under the Fair Work Act 2009 (Cth), an employee is entitled to be paid redundancy pay if their employment is terminated –
(a) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour, or
(b) because of the insolvency or bankruptcy of the employer. ²
There are some exceptions in the Act to an employer’s obligation to pay redundancy pay including–
• the employee’s period of continuous service with their employer is less than 12 months or
• the employer is a small business employer;³ or
• when a Modern Award / Enterprise applies and specifies that redundancy pay would not be paid
• in certain “transfer of employment” events where employment has transferred from one employer to another, and the employee’s prior service with the new employer is recognised. 5
An employer can also apply to FWC for an order that the amount of redundancy pay otherwise payable, is reduced because the employer has obtained “other acceptable employment”.6
Other acceptable employment
The recent case of the ORS Group Pty Ltd T/a The ORS Group before Commissioner Williams,7 heard an application by an employer, the ORS Group, to reduce the amount of redundancy pay to which the employee, Ms Kaur, was otherwise entitled, on grounds that the employer obtained “other acceptable employment”.
Ms Kaur was employed as a part time site manager and was employed by ORS for approximately six years when ORS advised her that her position was to be made redundant.
ORS had obtained other employment for her as a part time employment consultant on terms and conditions which included the same salary and part-time hours.
However, the new role meant that she would now report to a business manager whereas previously, she was employed as a manager and reported to an Area manager. Also, unlike her old role, the new role did not require any qualifications.
The Commissioner considered a previous Full Bench Commission decision of Clothing and Allied Trade Union of Australia v Hot Tuna Pty Ltd 8 which found factors such as pay levels, hours of work, seniority, fringe benefits, workload and speed and job security, location of employment and travel time as being relevant to whether other acceptable employment was obtained.9
In Ms Kaur’s case, even though her work location, hours and salary remained the same in both roles, and there was not any loss in her leave accruals, when viewed objectively, there were still important differences between the two positions.
The two positions had different KPIs; there was a lack of seniority in the new position and the key position responsibilities and duties were different.
Ultimately, the Commission determined that the new role amounted to a demotion or backward step for Ms Kaur and rejected the employer’s application to reduce her redundancy entitlements.
It is important that when you are offered a change of role by your employer, that you carefully consider the terms and conditions of the new role before accepting the role.
You should obtain legal advice about your rights to any redundancy pay or other legal options you may have
1. s.119 (2).
7.2018 FWC 4820
8. (1988) 27 IR 226
9. Ibid at paragraph 30