This latest ruling from the FWC posted by ‘Workplace Express’  in relation to a redundancy payout sheds some light on the intent of the legislation and will give some direction to employers who are looking at the redundancy process.

 An employee who refused a job offer in a transfer of business has won a full redundancy payout, with the Fair Work Commission holding that the test of acceptable alternative employment is not simply whether the employee can do the job.
Deputy President Peter Sams rejected an application by Mantra Hospitality (Admin) Pty Ltd under s120 of the Fair Work Act to reduce the redundancy pay it owed a housekeeping supervisor at a Sydney hotel following its decision last year to outsource her role to contract cleaning company Australian Hospitality Services (AHS).

The housekeeper – who had been with Mantra for 6.5 years and has limited English skills – was on $21 an hour and rejected an offer from AHS to stay on at the Sydney hotel as a room attendant on $17.05 an hour.

Mantra agreed it would pay her redundancy, but it calculated her entitlement on the lower hourly rate, and she received $1651.

It told the FWC that the role AHS offered her was “acceptable” employment under s120(1)(b)(i) for reasons including that it was identical to what she was already doing, but without the supervisory obligations; it was at award rates; she had asked to be moved to a lower classification; and she was able to perform the work offered to her.

The employee during proceedings rejected the company’s claim that she had asked to relinquish her supervisory role, and Deputy President Peter Sams said it was unnecessary to resolve that conflict.

It was, he said, irrelevant that she “may have wanted to relinquish her supervising position and revert to a housekeeping role . . . The fact is, she never did.”

In finding the woman was entitled to a full payout, he said he had “no truck with an employee who is faced with redundancy and is offered comparable alternative employment, but refuses it because he/she would rather take a redundancy payout”.

That was not, he said, “the underlying intention or social and industrial purpose of redundancy benefits. Nor do I think it was the intention of the legislature when enacting s120 of the Act. It goes without saying, that in many cases, the existence of generous redundancy payouts, coupled with voluntary redundancy, actually serves as a disincentive to the preservation of jobs.”

However, citing relevant case law, Deputy President Sams said the offer of a housekeeping attendant role to someone who had been supervisor for two continuous years did not meet the “acceptable employment” tests.

He agreed with Senior Deputy President Richards in Von Bibra Robina Autovillage Pty Ltd that “the test is not whether the employee can carry out the new employment”.

“To the extent Mantra’s submissions relied on [the employee] being able to perform the work of a Housekeeping Attendant (which undoubtedly she could), they are rejected,” he said.

“There can be no doubt that [the employee] would suffer a significant cut in salary as a result of accepting the offer. Such an outcome could not be characterised as being ‘acceptable employment’. She was perfectly entitled to reject the offer.”

He said she should be paid her full redundancy of 11 weeks pay at $21 an hour, minus the $1651 already paid – a total of $7126.

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