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Did new job justify redundancy pay cut?

A small business that found a worker alternative employment was entitled to reduce his redundancy pay, a tribunal has ruled.

01 Dec 2022

The Fair Work Commission has affirmed an employer’s decision to reduce redundancy pay after it helped an employee find “other acceptable employment”.

Door World made an application pursuant to s 120(2) of the Fair Work Act 2009 (Act) to have the commission reduce the redundancy entitlement of a former employee.

The worker was employed as a joiner from February 2020 until August 2022.

Door World was a joinery business based in Mornington, Victoria. In about May 2022 the founders decided to retire. Employees of Door World were informed that the business would be closing.

The employer secured immediate employment for the worker with another nearby joinery company.

The employer then issued a termination letter by reason of redundancy to the worker on 20 July 2022, effective 22 August 2022. The worker began work with the alternative joinery company on 29 August 2022.

Door World submitted that the employee’s redundancy entitlement should be reduced by three weeks because it obtained employment for him that constituted “other acceptable employment”.

The employee contended that Door World did not obtain employment for him. He claimed that all the employer had done was ask the other joinery “if he would like me to work for him which [Jock]'s reply was yes”.

Decision

Deputy President Amber Millhouse considered the definition “'obtain” to mean "possession [as a] result of the conscious, intended, acts of the person concerned as distinct from, for example, coming into possession of something by gift or inheritance.”

The evidence revealed the worker's alternative employment arose due to the employer’s conscious and intended actions.

This included Door World meeting with the joinery to secure the opportunity and negotiating the substantive terms of employment directly with the owner prior to the worker's employment ceasing. While the joinery refrained from negotiating the specific wage rate payable to the worker, the evidence showed that the worker understood his rate of pay as this was communicated to him directly.

In ruling whether alternative employment was acceptable, the Deputy President observed objective standards applied in determining acceptability.

The worker had suggested the alternative employment was not acceptable as the rate of pay decreased, travel time increased from 9 minutes to 31 minutes and he needed to learn furniture joinery.

However, the commission considered that the role at the alternative joinery company had the same title, duties, hours of work and broadly similar location to Door World's business.

“The reduced salary also weighed against the employee’s having sought to find continuing employment as a joiner, having the scope to enhance his skills as a joiner at Jock Lewis Joinery and thereby advance his chosen career, evidence that Jock Lewis Joinery has committed to increasing his rate of pay,” Deputy President Millhouse said.

The FWC held the alternative employment was acceptable and made orders to reduce the redundancy pay entitlement from six weeks' to three weeks' pay.