Redundancy and Acceptable Employment: Children’s Services Support Unit (CSSU) Inc [2014] FWC 7503

The Fair Work Act 2009 (Cth) (the Act) permits an employer to make an application to the Fair Work Commission (the Commission) to reduce the amount of redundancy pay payable (even down to zero) if the employer can establish it offered the employee acceptable alternative employment.

In Children’s Services Support Unit (CSSU) Inc [2014] FWC 7503 (24 October 2014), the Commission found that offering an employee a lower paid position with less seniority in a rural town with higher housing costs is not appropriate alternative employment.

Background to the Case

The employee worked as a manager at a remote government childcare service. A number of staff reported to her. Following the decision that her position was no longer required, the employee was offered alternative employment as a second-in-charge co-ordinator at an Early Learning Centre in a town 70 km from where she lived. The new position involved a 19% reduction in pay.

As a consequence of the employee rejecting the offer, the employer made an application to the Commission, for the employee’s redundancy pay to be reduced because it had offered acceptable employment. In arguing that the new role as a second-in-charge co-ordinator was acceptable, the employer submitted that when the employee accepted her initial employment two years earlier, she had agreed to a term in her contract of employment that stated that she may need to relocate as the employer required.

The employee, by contrast, submitted that the offer was unreasonable because she would have to move house and the cost of housing was more expensive in the rural town, her husband was employed in the town where they currently lived, the new role involved a 19% pay decrease and she would be required to work with children under five years of age where her previous role was with school age children up to the age of 12 years.

Findings by the Commission

The Commission agreed with the employee and found the alternative employment to be unacceptable. In reaching this decision, Commissioner Williams stated that the determination of whether alternative employment is acceptable is an objective one.

The fact that alternative employment may be rejected by an employee does not immediately make it unacceptable. Commissioner Williams identified a list of criteria from previous Commission decisions to assist with the analysis.

This includes the employee’s skills, experience and physical capacity, the rate of pay, hours of work and conditions of employment associated with the new job, whether or not continuity of employment is provided to the employee and the extent of any additional travel distances from home to the new place of work.

Commissioner Williams found that the 19% reduction in pay, the reduction in the seniority of the position and the increase in housing costs to be indicators that the offer of alternative employment was unacceptable.

The Commissioner did not consider the fact that the employee would have to move house to be an indication that the alternative employment was unacceptable because of the employee’s previous express agreement that she may need to relocate when she agreed to the terms of her employment contract two years earlier.

Commissioner Williams also did not consider that the employee would be working with children under the age of five to be unacceptable because it was not a “radical departure” from the employee’s existing skillset.

The Ruling

As the application by the employer was dismissed, the employee was entitled to receive her full redundancy entitlement.

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.

Redundancy and acceptable employment