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Managing people

Loss of company vehicle meant new job wasn’t a suitable “alternative”

A foreperson with eight years of service faced a dilemma when his new job offer lacked the company vehicle he relied on for daily commutes.

28 Mar 2024

Mike Toten

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

When an employee’s job became redundant, the employer found him another one with a different employer, but without the use of a company vehicle that he had used to drive 80 kilometres return between home and work. The Fair Work Commission (FWC) has held that this loss was big enough to mean that the new job was not “other acceptable employment”.

Facts of case

The employee was a foreperson with eight years of service. The employer provided him with a fully-maintained utility to travel to and from work, which amounted to an estimated 15-20,000 kilometres per year.

The employer closed a section of its business and negotiated with another company to take over some of its work and take on the employee and three other redundant employees. After they attended interviews, the other company agreed to hire them. The employee accepted the job, which had the same pay rate and working hours and was located in the same city, but no vehicle was provided this time. The employee had to use his own vehicle to travel to/from work.

The former employer then applied to reduce his redundancy pay from the National Employment Standards’ entitlement of 13 weeks to six weeks.

Decision

The FWC rejected the former employer’s application. It found that the new job was substantially similar to the old one, except that the loss of vehicle entitlement was an extra cost to the employee sufficiently great for the new job not to be “other acceptable employment”. The former employer was ordered to pay the full 13 weeks’ redundancy pay.

What this means for employers

An employer that seeks to reduce an employee’s redundancy pay entitlement must apply to the FWC for permission to do so. Providing the employee with “other acceptable employment” is a legitimate ground for applying for a reduction.

Whether the other employment is “acceptable” depends on many factors: rate of pay; hours of work; work location; seniority; fringe benefits; workload; job security; continuity of service; accrual of benefits; probationary periods; carer’s responsibilities; and family circumstances.

In this case, the value of the loss of use of a company vehicle was considered substantial because of the long commuting distance to/from work. While similar to the previous job in most other ways, the new job was, therefore, a downgrade from the previous one and not “other acceptable employment”.