The Law
Under the Fair Work Act 2009 (Cth) (FW Act), an employee is generally entitled to redundancy pay if their employment is terminated because the employer no longer requires the job to be done by anyone.
However, an employer can apply to the Fair Work Commission (FWC) to reduce redundancy pay (including to nil) if the employer “obtains other acceptable employment for the employee”.
The key element of a successful application to the FWC is demonstrating that the employer has obtained acceptable employment, not just assisted with the process. This was confirmed in a recent decision by the Full Bench of the FWC.
The case
Ready Workforce (A Division of Chandler Macleod) Pty Ltd (Ready Workforce) provided labour to the Mount Arthur Coal Mine under a contract with BHP. In late 2021, Ready Workforce was unsuccessful in its latest tender and BHP awarded the contract to another provider, Programmed Skilled Workforce Limited (Programmed).
After being advised of its unsuccessful tender, Ready Workforce stated it would “do everything possible” to ensure it could place its permanent employees with Programmed, including:
- sending workers an email informing them they would have the opportunity to apply for jobs with Programmed;
- sending workers links to job opportunities listed on Programmed’s website; and
- engaging in discussions with Programmed in relation to its staff at the site and their transfer.
Ready Workforce continued to communicate with Programmed about its staff, emphasising that it was keen to identify opportunities for redeployment for thirteen impacted workers. Ready Workforce offered assistance and information to Programmed in relation to these workers, including sharing employee training and medical records, and providing workers with paid time off to attend job interviews. All but one of these employees were successful in obtaining employment with Programmed.
On this backdrop, Ready Workforce made an application to reduce redundancy pay to nil on the basis that it had obtained acceptable employment with Programmed for the remaining twelve employees.
FWC Decision
The FWC dismissed the application to reduce redundancy pay. The FWC held, amongst other things, that:
- Ready Workforce’s actions did not operate as the “primary means” by which its employees secured employment with Programmed;
- Ready Workforce did not negotiate or secure any assurances from Programmed regarding employees obtaining employment with Programmed; and
- Ready Workforce failed to prove that it did more than facilitate and assist employees participate in a recruitment process with Programmed.
In other words, the FWC found that Ready Workforce did not obtain acceptable employment for these employees, but merely assisted and facilitated them in gaining acceptable employment.
Ready Workforce appealed this decision to the Full Bench, however, the Full Bench upheld the original decision and reiterated that the actions taken by Ready Workforce did not amount to procuring or acquiring employment for its employees with Programmed.
On this basis, the employees were entitled to redundancy pay under the FW Act as Ready Workforce had not obtained acceptable employment for its workers.
What does this mean for employers?
Employers need to be mindful that in order to be successful in an application to reduce redundancy pay, the employer needs to be able to demonstrate that it has obtained or acquired acceptable employment, not just assisted or facilitated in the process of employees being successful in finding employment with another employer.
Relevantly for the on-hire industry, if a provider loses a contract at a site (and is replaced by a new incoming provider), the outgoing provider needs to be able to demonstrate it has obtained acceptable employment for these employees with the incoming provider. If these employees gain employment with the new provider, it needs to be because that employment was secured by the outgoing provider, in order to be successful in application to reduce redundancy payments.
If you need any assistance implementing a restructure or would like further advice on understanding your obligations in respect to redundancy pay, our team is here to help. Please don’t hesitate to contact one of the members of the team directly or email us at info@hrlegal.com.au.
