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Alternative job too "different", so couldn't avoid redundancy pay

The FWC denied a request to avoid paying redundancy to an employee as the new job offered was too different from the old one, making it not a valid alternative.

25 Apr 2024

Mike Toten

Mike Toten is a freelance writer, editor and media commentator.

A company's application to avoid paying redundancy pay owing to an employee was rejected because the Fair Work Commission (FWC) found that the new job offered to the employee was "substantially different" from his old one and, therefore, not a genuine alternative.

Facts of case

The company wanted to avoid paying any redundancy entitlement to the employee. His entitlement was 13 weeks' pay, almost $40,000.

The employee was a Project Manager and was offered a "business development" role with the employer's subsidiary company. His employer gave him a letter of offer, employment contract and job description. It claimed that his skills were easily transferrable to the new job and minimal training would be required. But while it did include some project management tasks, a substantial part of it involved sales and new business development tasks. The employee rejected the job offer on the basis that he had no prior work experience in sales and business development; therefore, it was not suitable for alternative employment.

The current employer intended to cease training and close its business.

The employer warned the employee to reconsider. When he still refused the offer, it retrenched him, but applied to the FWC for an exemption from paying redundancy pay.

The FWC discovered that the employer's job offer had omitted an essential requirement of the new job: the employee had to meet a specified sales/revenue target. The employee had no experience in selling the subsidiary company's types of products. Therefore, his existing work skills and experience were not "readily transferrable", and the employer did not specify what forms of training it would provide to attempt to overcome that. The employee might eventually become capable of performing the new job after training, but there was no guarantee, and it wasn't clear how "training" could achieve that. The latter highlighted that the two jobs were "substantially different", and the employee was entitled to reject the new job.

Decision

The FWC ruled that the employer failed to provide acceptable other employment for the employee and rejected its application to reduce redundancy pay to nil. It had to pay the employee's entitlement of almost $40,000. It also rejected its claim that it could not afford to pay him.

What this means for employers

This case provides some insight into what the FWC takes into account when deciding whether a job offer made to an employee is "acceptable alternative employment". It includes the employee's work skills, work experience, and capacity to perform the new job. Where an employee would require extensive (and in this case unspecified) retraining, and would need to have skills and experience he/she has not needed or used previously, it is unlikely that the alternative job will meet the criteria required by the Fair Work Act 2009.