Despite being offered a number of alternative senior positions, when a manager’s role was made redundant, he decided he had been made redundant, and claimed severance pay. But the Federal Circuit Court has decided that this employee failed to appreciate the difference between the role being redundant and the employment being at an end.
The evidence revealed that the company was restructuring, and a number of roles were either to be abolished altogether or significantly altered. The manager’s current role was one such position and he was invited a number to apply for other senior roles that would become available. There was no question that the company wanted to retain his services.
The manager argued the alternatives were unsuitable and therefore he was redundant and entitled to severance pay. The company countered that it had made only the position redundant, the manager’s contract of employment included the prospect of his role changing and there were suitable alternative roles for him. Since his employment remained afoot, there was no redundancy and no severance pay entitlement.
Eventually the manager simply refused to attend work, still expecting his severance pay. The company took the view that he had abandoned his employment. They paid him only to the time he last attended at work.
The court found that the manager had not been made redundant simply by the fact that his current role was to be abolished. The court accepted that the manager’s contract provided for changes to his duties, responsibilities and even his job title. Further, at trial, the manager had not demonstrated that the alternatives offered by the company were significantly different to his current role in terms of employment conditions, job responsibilities or status within the organisation.
Most importantly, the court reiterated the established authorities on the situation where a positon is made redundant as opposed to employment being made redundant as follows: “The redundancy of a job or position does not necessarily amount to a termination of employment as contended. The authorities cited in support of that contention did not support it and in fact demonstrated that redundancy of a position does not necessarily mean that an employee’s employment is terminated.”
An important point about this case is the employer’s policy of including the key words in the employment contracts about the possibility of roles changing during the employment. Not having it would not alter the case law or the principles adopted by the judge, but it was very useful to have nevertheless. The court found the manager abandoned his employment and there was no case for the company to answer.