An employer can escape severance pay when making a position redundant if the employer finds the employee affected “acceptable alternative employment”. But what one person thinks is acceptable is not necessarily what turns out to be so under challenge, as a West Australian government agency found out recently.
The agency’s employee had accepted employment on the basis that it may require a relocation at some time in the future, and when her position became redundant, the agency transferred her to another location, about 70 kilometres away in WA’s remote north-west.
But there was more to it than just re-location. The new job, while in the same vein as her profession, was at a considerably lower level. Even this is not beyond the reach of what can constitute “acceptable alternative employment”. A lower paid job is not a deal breaker in itself for this type of re-deployment.
However when the offer was finalised, and the various elements put together, the employee could not accept what her employer was purporting to be “acceptable”. She took the matter to the Fair Work Commission (FWC) and the FWC agreed with her.
In its decision, FWC highlighted the nearly 20% drop in salary as the major stumbling block to endorsing the employer’s decision. FWC said the employee couldn’t really complain about the relocation as that was an original condition of employment (that it might happen), nor could she complain about the downgrading of her responsibility level (as the work was similar, just not to the same level of responsibility). But in combination, the hefty wage reduction, loss of status and extra travel (away from her home which she shared with her husband), the package was just not acceptable alternative employment.
The decision is useful because it reminds employers and employees that where redundancies occur, it is not automatic that everyone just lines up for the big pay-out. If alternatives exist, including with some features that might seem unpalatable, they are to be respectfully examined, and only where the package as a whole is deemed ‘unacceptable’, will FWC intervene.