Q. The company is currently undergoing a reorganisation which will unfortunately result in two positions becoming redundant. The affected employees earmarked for redundancy have been offered positions in other areas within the organisation. While there will be some loss of current employment conditions, mainly a company-supplied motor vehicle, their remuneration will remain unchanged and the jobs will be in the same location.
One employee has accepted the offer while the other employee has refused, indicating they would prefer to take redundancy pay and seek other employment. The company regards the offer of redeployment as reasonable, particularly as one of the affected employees has found the new job acceptable.
Is the employee who refused to accept the redeployment entitled to redundancy pay?
A. In this case, it is presumed the company employs 15 employees or more (which is the qualification for redundancy pay under the National Employment Standards). It should be noted some modern awards provide for redundancy pay where the employer employs fewer than 15 employees.
When an employer is considering redundancy, it must assess whether there are suitable redeployment opportunities available within its business or any associated entity. Whether a redeployment opportunity is reasonable depends on the circumstances of the particular case and must be assessed objectively.
In determining whether redeployment was reasonable a number of matters may be relevant, including:
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the nature and responsibilities of the alternative role;
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the employee's skills, qualifications and experience;
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any training required for the role;
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the location of the position in relation to the employee's residence;
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the remuneration package, including salary and other benefits; and
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whether the role represents a significant reduction in status, responsibility or employment conditions.
The Fair Work Commission has confirmed that remuneration should be considered broadly and may include non-cash benefits and entitlements, not merely base salary. As a result, the loss of a company motor vehicle may be a relevant consideration where it forms a valuable part of the employee's overall remuneration package. Whether the loss of this benefit makes the redeployment offer unreasonable will depend on its value and the overall impact on the employee's terms and conditions of employment.
Importantly, the fact that one employee accepts a redeployment offer does not automatically mean the offer is reasonable for another employee. Each employee's circumstances must be assessed individually. An employee may reasonably accept a role with reduced benefits, while another employee may have legitimate grounds for declining the same offer due to their personal circumstances or the overall impact of the change.
In this scenario, the employee who rejected the redeployment offer may still be entitled to redundancy pay if the alternative position is considered materially less favourable when all relevant factors are taken into account. Conversely, if the alternative role is substantially comparable in terms of remuneration, responsibilities, location and conditions, the employer may have grounds to argue that the offer was reasonable.
Bottom line
There is no single test for determining whether a redeployment offer is reasonable. Each case will turn on its own facts, including the nature of the alternative role, any changes to remuneration and benefits, the employee's skills and experience, and the location of the position. The fact that one employee accepts an offer of redeployment does not necessarily determine another employee's entitlement to redundancy pay.
