"Employers must offer more than just a role—they must offer reasonable alternative employment," stated Deputy President Lake, following a decision that denied a reduction in redundancy pay for a cabling worker.
Background and Key Issues
On 23 September 2024, the Fair Work Commission ruled against Australian Cabling Solutions Pty Ltd in their application to reduce redundancy pay for Sylvain Bardelli, an electrical worker. The company applied under Section 120 of the Fair Work Act 2009, arguing that Bardelli had been offered alternative employment, which would make him ineligible for redundancy pay. Bardelli, represented by the CEPU, contended that the alternative role was not "acceptable employment" due to the significant increase in travel time.
Section 120: Framework and Application
Under Section 120, employers can apply to the Fair Work Commission to vary or reduce redundancy pay if:
- The employer obtains other acceptable employment for the employee, or
- The employer cannot pay the redundancy amount.
The key point is that an employer cannot reduce redundancy pay on its own; a formal order from the Commission is required. Furthermore, the burden of proof rests on the employer, meaning the applicant must convincingly demonstrate that the alternative employment offered is objectively acceptable.
Flawed Offer of Alternative Employment
The heart of the decision lay in the interpretation of "acceptable alternative employment." The Commission highlighted that this assessment is an objective exercise, based on facts and evidence. Simply rejecting the offer does not make the alternative role unacceptable—what matters is whether the new role, considering all relevant circumstances, can be deemed "acceptable" under an objective lens.
Australian Cabling Solutions offered Bardelli a position at Wacol Correctional Facility, located over 100km from his home, compared to his previous project, just 13km away. The new commute would have taken over two hours by public transport or more than an hour by car—representing a significant detrimental change to his work conditions. The Commission found this excessive increase in travel time was unreasonable and outweighed the company's argument.
Key Factors in Assessing 'Acceptable Employment'
Past Fair Work Commission rulings have established several principles in determining "acceptable employment":
- Objective Assessment: The determination must be based on the facts of the case, not just the employee’s subjective view.
- Comparable Pay and Conditions: While alternative employment doesn’t have to be identical, it should offer comparable pay, hours, and continuity of service. Significant changes in any of these areas may render the new role unacceptable.
- Skills and Experience: The new role must align with the employee's skills, seniority, and experience.
- Travel and Location: The location of the work and any additional travel time are crucial considerations. Offers involving significant relocation—such as to another state—are unlikely to be found acceptable.
- Reasonable Cooperation: Employees are expected to cooperate with the employer in considering alternative roles. However, they are not obliged to accept positions that result in unreasonable changes to their working conditions.
In Bardelli’s case, the excessive travel time was the determinative factor, given that his previous role was close to his home, and there was no history of extensive travel requirements in his employment with Australian Cabling Solutions.
Fair Work Commission’s Ruling
Ultimately, the Commission ruled that the role at Wacol did not meet the standard of "acceptable alternative employment." Bardelli's long commute and the change in his regular work location were deemed excessive. As a result, he was entitled to six weeks of redundancy pay, corresponding to his two years of service.
Key Takeaways for Employers
This decision highlights several critical points for employers when attempting to vary redundancy pay under Section 120:
- Employers must carefully consider whether an alternative role truly aligns with the employee’s skills, experience, and working conditions, particularly when relocation or increased travel time is involved.
- The assessment of "acceptable employment" is objective and based on the totality of the circumstances, including factors like pay, hours, job security, and travel distance.
- Employers bear the burden of proof in demonstrating that the alternative role is reasonable. They must ensure that the new position is comparable enough to avoid redundancy pay while being mindful of any significant changes to conditions.
- Employees cannot unreasonably refuse an offer, but if the role involves significant inconvenience—like excessive travel—such refusal may be justified.
In conclusion, this case reinforces the importance of fairness in redundancy processes and provides clear guidance for employers on offering alternative roles. Employers must ensure that roles offered as alternatives to redundancy are objectively reasonable and take into account the employee’s specific circumstances to avoid costly payouts.
Australian Cabling Solutions Pty Ltd T/A Australian Cabling Solutions
(C2024/1575) DEPUTY PRESIDENT LAKE BRISBANE, 23 SEPTEMBER 2024 Variation of redundancy pay
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