Managing people

Refused to relocate: are you entitled to redundancy?

Are employees who refuse to relocate entitled to redundancy benefits?

12 January 2023

If an employee rejects a company's offer of relocation, would this jeopardise any entitlement to redundancy pay under the National Employment Standards as their respective jobs still technically exist?


 

Although the Fair Work Act (s389(2)) states that a dismissal is not a case of genuine redundancy if the employee could be redeployed within the employer’s enterprise, or an associated entity of the employer, any offer of redeployment must be reasonable.

In determining whether redeployment is reasonable, the Fair Work Commission will consider a number of matters, including the location of the job in relation to the employee’s residence. The question that will usually be considered is whether the change of location of employment is of a degree that it amounts to a repudiation of the contract of employment (in this case, it is presumed the employees will receive similar remuneration and will maintain similar management status.)

Generally, the following factors have been considered relevant when determining an employee’s entitlement to redundancy pay when the position is relocated, although this list is not exhaustive nor is any particular factor a greater determinant than another:

  • similar alternative employment is offered at the new location (ie similar remuneration and employment status)
  • the amount of notice given by the employer to employees of the planned relocation
  • whether or not there is a total rejection of the relocation or whether some employees accept the alternative offer
  • whether the new location offers similar or improved public transport facilities
  • the additional time taken and the number of kilometres travelled by employees to the new location.

See s.45 Appeal against decision ([2007 AIRC 952) by National Union of Workers - re Appeal - Full Bench - [2007] AIRC 1016; [2007] AIRCFB 1016 (6 December 2007).

It would seem reasonable for employees to refuse an offer of redeployment where the position is transferred interstate. If an employee rejects an offer of redeployment and is not paid redundancy pay, the employer must make an application to the Fair Work Commission to have the entitlement to redundancy pay reduced (possibly to nil), based on the circumstances of each employee.

Examples

In determining the reasonableness, or otherwise, of a new location, distance is not necessarily an overriding factor in justifying the reasonableness of an employee’s refusal to relocate, although an industrial tribunals reasoning on this point can be subjective. See Target Australia Pty Ltd v Shop, Distributive and Allied Employees Association re Target Retail Agreement 2001 - PR916204 [2002] AIRC 369; (4 April 2002).

For example, employers have successfully argued that offer of identical terms and conditions at a new location, which resulted in an increase in distance travelled by more than 40 kilometres, was reasonable and, therefore, no redundancy pay was payable. However, other cases have resulted in an order for payment of redundancy pay where the relocation was less than 30 kilometres.

In most instances, the employer also offered financial or logistical assistance to employees to alleviate any inconvenience to employees accepting the relocation.

Roles with lower remuneration or status

If an employer has other positions available (even at a lower level), and the redundant employees have the requisite skills, the employer should not presume the employees will refuse the position. An employee may be prepared to consider a role with less responsibility and less remuneration and have no objection to the role being different from the current one.

A finding, based on the evidence of the employee, may be open to the commission that it would have been reasonable in all the circumstances for an employee to have been redeployed into a vacancy with lower income and less responsibility. See Jenny Craig Weight Loss Centres Pty Ltd v Margolina [2011] FWAFB 9137 (23 December 2011).

Any offer of other employment may be ‘acceptable’ to the employee. Indeed, an employee may see an offer of (say) part-time employment in the same location as more acceptable than unemployment. These options, if available, should be discussed during the consultation process.

Relocation policy

An alternative sometimes canvassed by an employer when relocating the business or an employee’s position is the provision of additional benefits for those who relocate. Some employers offer a relocation allowance, as either a lump sum payment or a weekly allowance, to meet some of the additional cost of travel to the new location. Any weekly allowance is usually paid subject to being absorbed by any future wage increases.

In other cases, the employer has organised free transport, such as a bus service, for an interim period of time after the relocation to allow time for the employees to arrange suitable private transport. This will also depend on how much notice the employer was able to give employees of the intended relocation.

The bottom line: Generally, it would be considered reasonable for an employee to refuse an offer from the employer when a position is relocated to another state. Such a circumstance would usually render the current position redundant. A critical term of a contract of employment is the location where the employee is required to work.


 

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Learn how to make an employee redundant while staying on the right side of the law. This guide also includes a redundancy checklist and answers to Frequently Asked Questions.

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