Q. Our organisation is currently in consultation with an employee whose current position will become redundant due to an organisational restructure. We intend to offer another position within the organisation however the only job available for redeployment is in a different location (an additional one hour’s bus trip), fewer ordinary hours of work resulting in a reduction in remuneration and the alternative role is a fixed 12-month term (parental leave replacement). 

We have a number of questions relating to this situation.  

  • Should the company offer this role as redeployment despite the less beneficial employment conditions associated with the position? 

  • If the employee refuses the offer of redeployment would the employee be entitled to redundancy pay? 

  • If the employee accepts the offered position would she be entitled to redundancy pay at the completion of the fixed term contract?

 The company employs more than 15 employees. 

 

A. The company should offer the other position as the employee may find this offer acceptable. The employer should not presume the employee will refuse another position within the organisation, even if the position is of lower status or less remuneration. The employee may find a demotion (or the offer of part-time employment from full-time) preferable to the alternative, that is, unemployment. 

In the absence of the employee’s agreement, it appears there would be an entitlement to redundancy pay as the offer of reduced remuneration and the temporary nature of the position would mean it could be considered an unreasonable offer of alternative employment.

A demotion or a change in employment conditions that are substantially less favourable to the employee will amount to a breach of the employment contract, and therefore would be a genuine redundancy. Consequently, the appropriate redundancy pay entitlement will be payable. 

At the conclusion of a genuine fixed‑term contract:

  • redundancy pay is generally not payable, provided the contract ends at the agreed time and is not renewed

  • this assumes the fixed‑term arrangement is genuine and not used to avoid redundancy obligations.

Employers should clearly explain this during consultation so the employee can make an informed decision about accepting the redeployment role.
 


What is ‘reasonable’ redeployment? 

The Fair Work Act (s.389(2)) contains a provision that an employer cannot rely on the “genuine redundancy” provisions in order to avoid a claim of unfair dismissal unless it would have been unreasonable in all the circumstances for the employee to be redeployed within the employer’s enterprise; or the enterprise of an associated business entity of the employer. 

While the meaning of the term “redeployment” is not defined in the Fair Work Act, it is not sufficient for the employer to find another job within the organisation to avoid the payment of redundancy pay, unless the employee accepts the new terms of employment. Some modern awards provide for redundancy pay where the employer employs fewer than 15 employees. 

In determining whether redeployment was reasonable a number of matters may be relevant, including: 

  • the nature of any available position 

  • the qualifications required to perform the job 

  • the employee’s skill, qualifications and experience 

  • the location of the job in relation to the employee’s residence and the remuneration (pay and entitlements) which is offered. 

 
Bottom line 

Redeployment plays a critical role in redundancy processes, but it must be assessed carefully.

A role with lower pay, fewer hours, increased travel and temporary status may be considered unreasonable redeployment. If the employee refuses such an offer and employment ends, redundancy pay will usually be payable. If the employee accepts the role, redundancy pay will not be payable at that time, nor generally at the end of a genuine fixed‑term contract.

Employers should document consultation carefully, communicate consequences clearly, and seek advice where redeployment options are complex or likely to be contested.