Recycling company’s case for removing redundancy pay wasn’t complete rubbish: 70% reduction approved

By Mike Toten Freelance Writer

In one of the few cases where an employer has succeeded in reducing redundancy pay, The Fair Work Commission (FWC) has approved a reduction in two employees’ redundancy pay of 70%. The employer, a recycling company, had applied to reduce their redundancy pay to nil, but the FWC said that transferring them from an office to an unpleasant work environment had to be taken into account, but wasn’t the only factor.

Facts of case

The recycling company had made 100 employees redundant, but in the case of these two had found them equivalent administrative jobs with a rival recycling company.

However, one employee resigned after two days, claiming that her new work environment was significantly inferior in terms of workplace culture, noise and overall quality. The FWC found that job content, pay and distance from home were similar, however, her office was closer to the actual recycling processes, which involved “dusty, noisy and malodorous activities”. But while it may have been less attractive to the employee, it was not objectively unacceptable, when the standard test for a comparable job was applied.

The other employee, a scheduler, claimed that his new job had less responsibility, longer travel time and "constant stress and fear of inhaling fumes and dust particles", the latter due to trucks unloading rubbish close to his office. He had to travel about five kilometres further to work and had to report to other schedulers (not previously the case). He also claimed to have been intimidated by other employees. However, the FWC found that his actual work was similar to his previous job and he was slightly higher paid. Again, the new job was objectively acceptable when the standard test was applied. 

Decision

The FWC reduced the employees’ redundancy pay by 70% -- not to zero as requested by the employer. It noted that both employees had been moved from a “white collar” office environment to a less pleasant “blue collar” one.

However, the type of work, pay and other conditions had not changed significantly. 

The FWC also took into account the efforts made by the employer to obtain other jobs for both employees.

What this means for employers

When deciding whether redundant employees have been transferred to a comparable job, the FWC takes a wide range of factors into account. They include job duties, pay, reporting level, travelling time/distance, work environment, skill set, qualifications and experience. In other words, whether the new job is “acceptable in all the circumstances”. 

Read the judgment

Application by Job Site Recyclers Pty Ltd 2024 FWC 2192 (16 August 2024)