When it comes to redundancy payments, an employer can reduce the amount of redundancy pay if the employer obtains other acceptable employment for an employee. In a recent decision of the Fair Work Commission (“FWC”), it found that a work from home (“WFH”) role the employer had obtained for an employee was not “acceptable employment” and did not reduce or remove the employer’s obligation to provide redundancy pay to the employee.

In the context of many employees wanting to WFH this decision involved a reversal of that stereotype where the employer was wanting the employee to accept a WFH role, while the employee did not want to WFH.

The employee was an aircraft maintenance engineer who lived in Brisbane and accepted a role as a Business Development Manager for Components based in Ipswich and Adelaide. He was then seconded to a second company for six months into a role with the same title of Business Development Manager for Components which was based in Melbourne (requiring him to WFH).

After a few months the employer consulted with the employee about his substantive role being made redundant and presented an ongoing role with the second company to him which was essentially the role to which he had been seconded based in Melbourne.

In considering whether the employer had obtained acceptable alternative employment, the FWC found that the first threshold of whether the employer had “obtained” the role for the employee was satisfied. The FWC then outlined that all the characteristics of the role would be relevant to the assessment of whether the role is “other acceptable employment” and confirmed that this must be determined objectively and not subjectively from the perspective of the employee or the employer.

The non-exhaustive range of factors which the FWC identified as potentially relevant to assessing acceptable employment included:

• the nature of the work;
• the location and/or the need to relocate;
• pay arrangements;
• the hours of work;
• job security in the new position;
• seniority;
• workload and speed;
• the employee’s skills, experience and physical capacity;
• probationary period;
• equivalent conditions of employment;
• accrual of benefits;
• continuity of service;
• carer’s responsibilities;
• family circumstances;
• the comparability of the work with that performed in the current role;
• fringe benefits;
• whether the employee would have continuity of service in the new role; and
• travel and/or the cost of travel that is additional to that relevant to the original employment.

In this particular case, the FWC identified that the nature of work was within the employee’s skills and experience, which weighed in favour of a finding that it was acceptable employment. However, the FWC found the following factors weighed against a finding that it was acceptable employment:

• the reduced future remuneration and access to bonus schemes (the employee understood he was entitled to a bonus in his substantive position but not the proposed position, while the employer had restructured and the employee would no longer be entitled to a bonus in his substantive position. However, this was not communicated to the employee);

• the change in location compared to the substantive position, and not compared to the secondment position, which was 100% WFH (while the employer argued it was a hybrid role the FWC accepted that based on the communications between the employer and employee it was appropriate for the employee to conclude that this was a 100% WFH role);
• the seniority of the proposed role was one level down and reporting through another role to the CCO rather than directly to the CCO; and
• the increased travel to Melbourne for the proposed role, which required considerable logistics for the employee with a newborn and two four-year-old children at home (which would become further complicated when his partner returned to full time work) and impacted upon the employee’s ability to accommodate his family responsibilities.

Key Takeaways for employers

In addition to employers needing to be aware that a WFH arrangement will not necessarily be acceptable employment, the case also serves as a reminder to clearly communicate with employees about any proposed role. While the assessment of what is acceptable employment is an objective one, the FWC took into account the representations the employer had made about the role and the response of the employee. There were misunderstandings about the bonus scheme and the potential for the new role to be a hybrid WFH role, but the FWC found that these misunderstandings could have been addressed and resolved by the employer. Accordingly, employers should be careful to be very clear about the characteristics of any proposed acceptable employment. When concerns are being raised by an employee about characteristics of a role which are incorrect, it is important to correct these misconceptions about the role with the employee prior to making an application to the FWC to have any redundancy pay obligation reduced.

You can read out more about obtaining acceptable alternative employment in a redundancy situation here and here.