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Perspective

Determining an acceptable offer of alternative employment

If an employee is entitled to a redundancy payout under section 119 of the Fair Work Act 2009 (Cth), their employer can apply to the FWC under section 120 to reduce the amount payable if it finds acceptable alternative employment for the employee; or it is not financially competent or possessed of the necessary funds to make the payment and has no reasonable source of funds.

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In the case of ASG Maintenance Pty Ltd v Robert Lord [2020] FWC 5894 the employer made an application to the Fair Work Commission (FWC) under section 120 of the Fair Work Act 2009 (Cth) to reduce the redundancy payable.

The employee (a mechanic) was offered alternative employment at two locations – both significantly increasing his daily commute.

  1. The first location would increase his daily commute from one-hour, to two and a half hours.
  2. The second location would require a four-hour daily commute and a loss in income of $30,000. This was due to the fact that he would need to pay for local accommodation four nights per week (as it was unsafe for him to drive this distance on a daily basis, following his ordinary 10-hour shift).

The mechanic’s employment contract provided he may be required to travel to and from areas in which the company operates, and may be required to spend days away from his usual place of work.

The FWC found:

  • the offer requiring a four-hour commute was not acceptable because of the significant additional commute required, and associated loss in income, however
  • the offer requiring a two-and-a-half-hour commute was acceptable (given the project nature of the labour hire and hydraulic services business).

A 100% reduction in the redundancy payable (seven weeks) was granted on the basis that it found and the mechanic refused acceptable alternative employment.

Lessons for employers

  • Alternative employment which would require a significant increase in commute times may still be considered acceptable for the purposes of section 120 of the FW Act if the nature of the business ordinarily requires travel (for example, if the company operates at various locations) and the employment contract outlines this requirement.
  • This does not apply where an employee’s entitlement to a redundancy payout stems from an enterprise agreement, company policy or the terms of their employment contract.

Written by Nes Demir

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Our team is here to provide the right advice for your business and workforce. If you have a question or require assistance, please contact Andrew Douglas.

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