By Charles Power

[Ed Note: Have you considered that if you relocate your workplace, the relocation may trigger redundancy obligations?

The Fair Work Commission (FWC) Full Bench recently considered this, after an employer relocated and expected its employees to attend work 34 kilometres away from its original location.

The FWC’s decision took into account:

• the extent to which the relocated employees’ terms of employment permitted the transfer to the new location;
• the distance between the workplace locations; and
• the impact of the relocation on employees.

In today’s bulletin, Charles Power details how the FWC came to their decision.

Until next time…]

Case Law: The redundancy implications of relocating a workplace

In DL Employment Pty Ltd v AMWU (2014), the employer closed its plant at Kogarah and directed the employees to attend work at a new plant at Ingleburn, 34 kilometres away.

When a number of employees rejected this change and the employer refused to pay the employees redundancy payments, the employees took the dispute to the FWC.

Kogarah employees were covered by an enterprise agreement adopting the standard formulation of redundancy, i.e. redundancy is where the employer no longer requires the employee’s job to be done by anyone.

Was the relocation allowed under the employee’s terms of employment?

The FWC’s first step was to look at the terms governing the employee’s employment to determine whether they permitted the employer to require the employees to work at the new location. If the terms permitted the transfer, an employees’ job could also be transferred without triggering redundancy.

Kogarah employees were covered by an enterprise agreement that, according to the FWC, did not allow transferability between the two sites at Kogarah and Ingleburn. However, after the enterprise agreement had been made, the employees had signed a contractual document which provided for the transfer.

The FWC ruled that the contractual provision for transferability did not operate because it was inconsistent with the enterprise agreement. Accordingly, the FWC decided it was a term of each employee’s employment that they could not be transferred from the Kogarah plant to the Ingleburn site unless they agreed.

As a result, the effect of the employer’s decision that it no longer required the employees’ jobs to be performed at Kogarah was that their jobs were no longer required to be performed by anyone, i.e. they were redundant.

Did the relocation trigger an entitlement to redundancy pay?

That an employee’s job is redundant does not ordinarily trigger an entitlement to redundancy pay. Firstly, the employee’s employment must end for an entitlement to arise. Secondly, in many circumstances a redundant employee will lose their entitlement to redundancy pay if they reject an offer of suitable or acceptable employment.

In this case, the FWC ruled that the employer’s direction for an employee to work at a new location resulted in termination of employment because it was repudiatory of the employment contract – in other words, the employer was effectively disowning the employment contract and seeking to impose a new one in its place. This was due to:

• the additional distance for employees to travel to the Ingleburn site;
• the significant additional travelling time involved; and
• the extent of the consequential disruption to the long-established patterns of the employees’ personal lives and circumstances.

Was the employment at the new location acceptable employment?

The employer tried to argue the new jobs located at Ingleburn were acceptable employment for the redundant employees, which disentitled the employees to redundancy pay. Section 120 of the Fair Work Act 2009 (Cth) (FW Act) allows employers of redundant employees to seek an exemption from paying redundancy payments where reasonable alternative employment is obtained for the affected employees.

However, in this case the FWC ruled that section 120 did not apply to the redundancy pay entitlements in the enterprise agreement. The enterprise agreement required a redundancy entitlement to be paid unencumbered by section 120 of the FW Act.

Furthermore, the enterprise agreement did not provide for the avoidance of redundancy pay entitlements where the employer obtains acceptable or suitable alternative employment.