When we hear the phrase, “I was made redundant” in everyday conversation, many understand this to mean that an employee has lost their job. However, from a legal perspective, this understanding is not quite accurate. 

It is an important distinction, but redundancy refers to a role being made redundant, not an employee. A redundancy occurs when an employer no longer requires a particular role to be performed by anyone. Redundancy does not automatically result in an employee’s employment being terminated and a redundancy payment being made.  

This is because if an employer offers an employee “other acceptable employment” the employer may then apply to the Fair Work Commission (“FWC”) to reduce the amount of redundancy pay that an employee is entitled to under the National Employment Standards. But what happens when an alternative position is offered but declined by an employee who disputes the acceptability of the new role, are they still entitled to redundancy pay? 

Background  

The FWC considered this scenario in a recent decision. The employee had been working on two projects which were ending. While the employee’s position was being made redundant he was offered a role at another of the employer’s operations. The characteristics of the new role included:   

• it was the same job title as the employee’s existing position; 

• the new work location, although different, was only four extra minutes from the employee’s home; and 

• the employee was offered the same pay, with an additional bonus incentive scheme not available in his current role. 

The employer considered this met the definition of “other acceptable employment”. Despite this, the employee declined the role and asserted that he was entitled to receive his full 6 weeks of redundancy pay. 

The employer proceeded to make an application to the FWC to reduce the employee’s redundancy pay. The FWC ultimately found that the employer had satisfied the requirements for offering other acceptable employment. The FWC ordered that the employee’s redundancy pay be reduced from six weeks to nil. 

The decision confirms that it is not for an employee to determine whether an alternative role is acceptable to them. Instead, the role must be assessed against an objective standard to determine whether it constitutes “other acceptable employment”.  

Tips for navigating redundancies 

One of the takeouts from the case is how the language employers use when discussing redundancy can significantly influence an employee’s understanding of their entitlements. In this case, the employer’s initial communication created confusion because the employee was told that if he did not accept the alternative role, he would need to resign. 

This inaccurate framing shifted the entire conversation. Rather than engaging with the suitability of the proposed “other acceptable employment”, the employee focused on explaining why he did not wish to resign. As a result, the communications with the employee lacked clarity, the redeployment process was misunderstood, and the purpose of discussions was obscured. 

Clear, accurate and well-structured communication is important when navigating the redundancy process. Before entering discussions about redundancy, employers should ensure their position is clear, terminology is correct, obligations are understood and all redeployment options are clearly documented. 

Employers also need to be aware that even if “other alternative employment” is offered to, and accepted by, an employee this does not mean the obligation to pay redundancy pay automatically goes away. An employer must make an application to the FWC to reduce an employee’s redundancy pay, otherwise the employer remains obligated to pay the employee their full redundancy entitlement.  

For more information about “other acceptable employment” and redundancy you can read our articles here and here.