By Catherine Ngo Senior Editor and Content Writer, My Business

Background

In September 2023, Bartercard restructured its business, resulting in redundancy for its Business Development Managers. The impacted employees were offered a new role of 'Trading Specialist' that involved working exclusively from home, with some changes in responsibilities and, in some instances, increased pay. However, the employees rejected this offer, considering it a demotion and substantially different from their previous roles.

Bartercard then applied to the FWC to reduce the redundancy pay, arguing that it had provided acceptable alternative employment. The FWC agreed with Bartercard, stating that the new roles did not need to be identical but should be achievable for the employees following the restructuring. Hence, the FWC concluded that the Business Development Managers could have performed the Trading Specialist roles and were offered reasonable alternative employment.

In determining the reduction in redundancy pay, the FWC considered factors such as:

  • the length of notice provided by Bartercard
  • the depth of consideration given to the alternative employment by the employees
  • their length of service and 
  • the challenges of setting up a remote office. 

As a result, the FWC ordered a reduction in redundancy pay ranging from one week to four weeks for each employee, depending on their circumstances.

This case highlights the significance of employers offering reasonable alternative employment in redundancy situations. If an employee turns down such an offer, the employer may be eligible to apply to the FWC to reduce the redundancy pay.

Guidelines for Reducing Redundancy Payouts

An employer can petition the Fair Work Commission to lower the amount of redundancy payment they are required to make in certain circumstances:

  • If they can secure acceptable alternative employment for the affected employee
  • If they are unable to afford to pay the full redundancy amount

Not all employees are eligible for redundancy pay when their positions are redundant. 

The following categories of employees are not entitled to redundancy pay:

  • Employees who have worked for the employer for less than 12 consecutive months
  • Employees hired for a defined term or a specific season
  • Employees dismissed due to severe misconduct
  • Most casual employees
  • Trainees employed solely for the length of their training contract
  • Apprentices
  • Most employees of small businesses

Can employees challenge their redundancy pay?

Employees who have been terminated can challenge their employers over the redundancy pay they receive. The options available to them are:

1. Small Claims Court: Employees can file a claim in Small Claims Court if they believe they are owed less than $20,000 and the payment is due within six years.

2. Local Court or Federal Circuit Court: If the amount owed is more than $20,000, employees can go to another local court division or the Federal Circuit Court, depending on the amount being claimed.

3. Fair Work Ombudsman: Employees can report their employer to the Fair Work Ombudsman, who may investigate the business for underpayment of wages, including redundancy pay.

Mediation is often advised for employers with aggrieved former employees as a more cost-effective alternative to going to court. Resolving these matters privately, even with the assistance of a lawyer, can help save time and money for both parties.

Case reference: Bartercard Digital Australia Pty Ltd [2024] FWC 828 (2 April 2024)