What is acceptable alternative employment.   

-  Two recent decisions

The FWC has dismissed an employer’s application to reduce an employee’s redundancy pay entitlement, on the basis that an offer of employment rejected by the employee involved a significant pay cut and was therefore not “acceptable alternative employment”. 

The employee worked as a housekeeping supervisor at a hotel, earning $21.00 per hour. The employer decided to outsource its housekeeping work to a cleaning company, who ultimately offered the employee a housekeeping attendant job at the rate of $17.05 an hour. The cleaning company stated that the employee’s pay had been reduced because she had wished to relinquish her supervising position. The employee declined the cleaning company’s offer of employment. The employer offered the employee a partial redundancy payment calculated on the difference between the supervisor and attendant rates. The employer applied to the FWC to reduce the full redundancy payment, on the basis that the cleaning company’s offer of employment constituted “acceptable alternative employment”. 

The FWC found that the employee should be paid her full redundancy entitlement, on the basis that: 

·          it was irrelevant that the employee may have wanted to relinquish her supervisor position, “the fact is, she never did”; 

·          it needed to determine what work the employee was “actually performing and what she was being paid at the point the offer of alternative employment with the [new employer] was made”; and 

·          the test of “acceptable alternative employment” is “not whether the employee can carry out the new employment”.  The employee would "suffer a significant cut in salary as a result of accepting the offer”, so it could not be characterised as “acceptable alternative employment”. 

In another recent decision has provided very helpful guidance on what constitutes an acceptable offer of alternative employment where the position has been made redundant. 

In this matter, two employees for a catering service in the Hunter region rejected an offer of alternative employment on the basis that the 25km travelling distance to the new location was too far, making the offer unacceptable. The new location would have offered them employment in similar catering-based roles with the same pay and hours. 

The employer applied to the Fair Work Commission (“FWC”) to get an order to vary the obligation to pay redundancy pay to the two workers who refused to be redeployed.  

FWC affirmed that the employer bears the onus of proving that such an offer is acceptable. The employer submitted that the employees’ contracts provided for such a move and therefore it was entitled to change the location. 

The FWC held that the additional travel time to the new location did not constitute an unacceptable offer of alternative employment. The FWC was satisfied that the appropriate travel time to the new location was considerably less than what the employees claimed and did not prevent the offer from being acceptable. The employer’s application to reduce the employees’ redundancy pay to zero was granted. 

Spotless Services Australia Limited (2013) FWC 4484 Katrina Li and Chris Tan