If changes are being made to your role, your job may be redundant. However, if your employer is offering you redeployment and you don’t accept it, it may impact the amount of redundancy pay (if any) you receive from your employer.
When am I entitled to redundancy pay?
You are entitled to redundancy pay under the National Employment Standards if your employment is terminated by your employer because your employer no longer requires your job to be done by anyone or where your employer is insolvent or bankrupt.
However, you are not eligible to receive redundancy pay if:
- you were employed for less than 12 months
- you were employed for a fixed project, or fixed contract
- your employment was terminated for serious misconduct
- you were employed as a casual employee
- you were employed by a small business not required to pay redundancy
You can use the Fair Work Commission’s (FWC) pay calculator to confirm your redundancy pay.
Can my employer reduce my redundancy pay?
In some cases, yes, your employer can apply to the FWC to reduce the redundancy pay paid to you, if they obtain other acceptable employment for you or cannot pay the amount (financial hardship), (section 120 of the Fair Work Act 2009 (Cth)).
So prior to rejecting an offer you should ensure you are comfortable that it is not classified as ‘other acceptable employment’ (as explained below). If it is acceptable employment and you reject it, you may not receive any redundancy pay.
What is ‘other acceptable employment’?
As the definition of ‘other acceptable employment’ is not included in the Fair Work Act 2009 (Cth) we need to look to case law instead to help us determine whether an offer falls into the category of ‘other acceptable employment’. Deputy President Sams, identified some key commonalities in the FWC’s approach:
- The test of what constitutes ‘acceptable employment’ is an objective one. It does not mean it must be acceptable to the employee.
- ‘Acceptable employment’ is not identical employment, as no two jobs could be exactly the same.
- An employee must meaningfully cooperate with the employer in exploring or considering options for alternative positions.
- An employee’s prima facie entitlement to redundancy pay may be at risk if the employee refuses a role or position, which is found to be objectively ‘acceptable’.
- The acceptance of alternative employment by one or more persons in a group of redundant employees, does not necessarily make the alternative employment ‘acceptable’ for all of them. Each employee’s individual circumstances must be taken into account.
- There are a range of factors of varying weight, according to an employee’s particular circumstances, which may be taken into account to assess the acceptability of alternative employment.”
DP Sams goes on to summarise the range of factors as follows:
- Mere rejection by the employee does not make the offer unacceptable.
- comparable or equivalent pay and conditions, including hours of work and continuity of service are important and relevant considerations.
- The location and any additional travel time are a relevant consideration.
- There may be some inconvenience or detrimental alteration to the terms and conditions of employment.
- An employee should not unreasonably refuse an offer of alternative employment simply to access redundancy pay.
(Spotless Services Australia Limited T/A Alliance Catering  FWC 4505 at 65).
Deputy President Sams’ approach has been reaffirmed by more recent cases such as Aisle 4 Pty Ltd T/A Greener Grocer v Nicola Hawkins  FWC 4185, Kresta Blinds Ltd v Ms Sharon Bryant  FWC 3552, and Electricity Networks Corporation T/A Western Power [ 2020] FWC 582.
Along with the matters identified by Deputy President Sams, there are several factors the Commission/ Court will also consider in determining the acceptability of alternative employment:
- the nature of the work
- necessary skills and relevant duties
- work load
- pay levels
- hours of work
- job location
- fringe benefits
- loss of entitlements/accruals
- job security
(Electricity Networks Corporation T/A Western Power  FWC 582 at 89).
What steps can I take to ensure my redundancy pay is not reduced?
Step 1: Work with and engage with your employer, so that you can demonstrate your cooperation if your employer seeks to reduce your redundancy pay.
Step 2: Remember the test is an objective one, so even if other employees at your work have accepted a new role, that doesn’t mean it is necessarily acceptable for the purposes of section 120 of the Fair Work Act 2009 (Cth). On the flip side, if the role isn’t acceptable to you personally, it doesn’t mean it isn’t acceptable under legislation.
Step 3: Review the offer and compare it to your previous role. The job offered doesn’t need to be exactly the same as your previous role to be found to be acceptable. Consider the factors listed above when negotiating or deciding to refuse a role. This is best done by highlighting significant differences in written job descriptions including related to your duties, reporting line, seniority and remuneration.
Step 4: Try to reach an agreement with your employer about whether you will accept the offer or reject it and receive redundancy pay before making any final decision. If your employer maintains it is acceptable employment and you do not agree you should inform them of the requirement to apply to the Fair Work Commission to have the requirement waived. If your employer does not make that application and does not pay your redundancy pay you can challenge the decision in the Federal Court or Federal Circuit Court by making an underpayment claim.
If you are currently negotiating a redundancy and need help or your employer has made an applicationto vary redundancy pay and you’re not sure how to respond, we can assist!