When a hotel outsourced it’s housekeeping, the new contractor offered a supervisor whose job disappeared as a result, a lower paid job. The hotel paid a partial redundancy, based on the difference between the employee’s old rate and new rate, and paid that for the number of weeks according to her length of service. This, the hotel management claimed, was consistent with its rights to not pay full redundancy because it had secured “acceptable alternative work”.
Their argument was that the supervisor was quite capable of doing the work, that it was in the same area and the actual duties were those she used to supervise. However the Fair Work Commission disagreed. It said that the mere fact the supervisor could do the job, did not mean she should do the job or forfeit her redundancy pay.
The supervisor role paid $21 per hour whereas the offered job paid $17 per hour. Even though a reduced pay rate came with much reduced responsibilities, it still represented a significant loss of income. Citing previous decisions with approval, the FWC came to the conclusion that the employee was being asked to take a substantial pay cut, a reduction in status and responsibility and that on balance, “such an outcome could not be characterised as being ‘acceptable employment’”.
There is no hard and fast rule in these matters. Even though the reduction of pay in this case was nearly 20%, and despite the eventual outcome of the case, the FWC Deputy President was moved to press the employee, saying “surely a job paying $17 an hour, without loss of continuity or accrued benefits, was better than no job at all?”. This shows that each case will be treated on its merits, but employers should initiate an action in FWC for relief, or partial relief, from redundancy pay, rather than taking unilateral action in these situations.