ASG Maintenance Pty Ltd v Lord (2020)
ASG Maintenance Pty Ltd (ASG) operated a labour hire and hydraulic services business within rural New South Wales and Queensland. As part of a restructure, ASG advised Mr Lord, who was employed as a Light Vehicle Mechanic, that it no longer required his position at the mine where he was located. ASG offered Mr Lord the choice of the following two positions:
- Service Mechanic. This role was located at Tomingley, NSW. The position was 163 kilometres from Mr Lord’s residence and would have resulted in an additional 1 hour and 23 minutes of travel time each way. In addition, it would reduce his income by approximately $30,000 gross per annum.
- Light Vehicle Mechanic. This role was similar to Mr Lord’s present role; however, it was located in Dubbo, NSW. The position was 113 kilometres from Mr Lord’s residence and would have resulted in an additional 52 minutes of travel time each way. This role was similar in salary and employment conditions to his present role.
Mr Lord refused both offers, claiming the additional travel time was unreasonable, would cause health and safety issues due to fatigue, and would affect his family and community commitments.
ASG thereafter concluded Mr Lord’s employment on the basis of redundancy.
ASG made an application pursuant to s120 of the Fair Work Act 2009 (Cth) to the Fair Work Commission (FWC) to reduce Mr Lord’s redundancy payment to nil, on the basis of having obtained other acceptable employment for Mr Lord.
The FWC objectively considered whether the two options given to Mr Lord constituted ‘other acceptable employment’. Mr Lord’s rejection of the offers did not automatically mean the offers were unacceptable. However, simply making the offers did not mean that ASG could reduce Mr Lord’s redundancy payment to nil.
After evaluating the evidence, the FWC held:
- the Service Mechanic position at Tomingley did not constitute other acceptable employment, given the additional travel time was excessive and there was a significant reduction in salary; and
- the Light Vehicle Mechanic position at Dubbo constituted other acceptable employment, given the position was similar to Mr Lord’s former role, and it had similar pay and conditions.
The FWC did not consider the additional travel time to Dubbo unreasonable when considering the position offered as a whole and the nature of ASG’s business, which operated in rural areas and necessitated travel. On this basis, the FWC reduced Mr Lord’s redundancy payment from 7 weeks’ pay to 5 weeks’ pay.
In the current economic climate, while many positions are being made redundant, many employers are finding it difficult to pay redundancy entitlements. Employers can apply to the FWC to reduce the redundancy pay payable on the grounds the employer cannot pay or it has obtained other acceptable employment for the employee. Whether the other employment is acceptable will be objectively assessed. Note that obtaining an interview for the employee for another position is not sufficient.