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Get Advice Before Varying Redundancy Pay

On 14 February 2024, the Fair Work Commission (FWC) handed down a decision in an underpayment claim involving varying redundancy pay. Our employee relations experts examine the case and what it means for businesses. 

Case Facts

Mr Bill Harold McLaughlin commenced employment with Watters Electrical Pty Ltd on 1 February 2016 as an electrician, before moving to the high voltage department in July 2022. During this period, Mr McLaughlin was using a company-issued twin cab ute that he used to commute to and from his residence in Beechworth, Victoria to the Watters Electrical workshop in Albury, New South Wales. This was an 80km round trip each day.

In October 2023, Watters Electrical made the decision to close the high voltage department due to declining work opportunities and continued difficulty in recruiting and retaining staff, therefore making employees working in the department redundant. As a solution, Watters Electrical met with GPE Electrical and Communications (GPE) to discuss GPE taking on the high voltage department, including existing staff. GPE agreed and on the same day as this discussion, management at Watters Electrical met with the employees in the high voltage department to discuss the opportunity to move to GPE.

On 18 October 2023, ten days after the initial discussion with GPE, Watters Electrical passed on the employment details of Mr McLaughlin and three other employees to GPE. GPE required all four employees to attend interviews, and afterwards decided to engage each of the employees. Mr McLaughlin ceased employment with Watters Electrical on 20 December 2023 and commenced employment with GPE on 8 January 2024. Mr McLaughlin was subject to a three-month probationary period upon commencement with GPE, but did continue to receive the same hourly rate and continued in a full-time position. However, Mr McLaughlin was not provided with a company-issued vehicle from GPE, despite the commute being similar to what Mr McLaughlin had been doing with Watters Electrical.

Due to sourcing redeployment for Mr McLaughlin, Watters Electrical made an application to the Fair Work Commission to vary Mr McLaughlin’s redundancy pay entitlement from 13 weeks to six weeks. Deputy President Ian Masson found that Watters Electrical did appear to secure acceptable redeployment, noting that the role at GPE was substantially the same as the role at Watters Electrical, except that Mr McLaughlin would not be performing any supervisory duties at GPE. Deputy President Masson explained that this was not significant as Mr McLaughlin receives the same amount of pay.

The Decision

Despite Deputy President Masson finding the two roles substantially similar, he did conclude that the loss of a company-issued vehicle was significantly detrimental to Mr McLaughlin.

Deputy President Masson explained that based on Mr McLaughlin’s daily commute to and from work, the total travel each year would have to be between 15,000km to 20,000km. This would mean that Mr McLaughlin would have to personally fund petrol and maintenance costs for his own vehicle, which he did not have to fund whilst employed at Watters Electrical in the same role. As such, Deputy President Masson held the loss of the company-issued vehicle to be significant enough to not warrant the role at GPE to be acceptable redeployment for Mr McLaughlin. Therefore, Deputy President Masson found there was not sufficient grounds to vary the redundancy pay entitlement and Watters Electrical application was dismissed.

Key Takeaways

It is very common for employers to make applications to vary redundancy pay if they have sourced redeployment for an employee that was made redundant. While in this decision the role itself was considered acceptable, the loss of a substantial benefit that the employee had been granted by their previous employer in their previous role meant that the new role was not considered acceptable alternate employment.

Due to the uncertainties when it comes to varying redundancy pay, as well as what classifies as ‘suitable redeployment’, CCIWA strongly recommends that employers contact the Employee Relations Advice Centre on 08 (9365 7660) or via advice@cciwa.com to seek further advice prior taking any action. 

CCIWA, Business Law WA and REEFWA has taken all reasonable care in preparing this document. The contents of this document do not constitute legal advice and should not be relied upon as such. Specific advice for your situation should be sought from CCIWA, Business Law WA or a professional adviser before any action is taken. Neither REEFWA, CCIWA nor Business Law WA accept responsibility for any claim that arises from any person acting or refraining from acting on the information contained in this document.

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