News & Insights

In a recent decision, the Fair Work Commission (FWC) has considered how much travel time is reasonable when determining whether an alternative employment offer is acceptable to an employee in the process of a business restructure. The decision will likely have flow-on effects for similar disputes by drawing a line between what is considered alternative acceptable employment.

alternative acceptable employment following a redundancy

Eagers Automotive (Eagers) applied to the FWC to reduce the redundancy pay of 12 weeks to nil for a former sales consultant, Mr Varcoe. Eagers argument in support of the reduction was that the employer had obtained other suitable employment for Mr Varcoe, albeit a further 40 minutes’ drive from his current place of employment, which he unreasonably refused.

alternative employment options proposed to the employee

Eagers offered two alternative employment options to Mr Varcoe at associated dealerships.

One alternative role required an additional travel time of 20 minutes’ each way, with Eagers proposing to pay for both a company vehicle and fuel for this role.

The second option was also the same as Mr Varcoe’s previous position, but the opportunity was only for three months, as it was to replace a staff member who was taking time off for a personal injury. Eagers did not guarantee that Mr Varcoe would be offered a permanent position after the three months.

Mr Varcoe declined both roles. He declined option one due to the extra travel time, and he declined option two due to the uncertainty of an ongoing position.

fwc principles and findings

The FWC rejected Eagers application and reiterated the following:

1. the test of what constitutes acceptable employment is one that is viewed objectively, and not one that is acceptable to the employee;
2. an employee’s redundancy pay may be at risk if they refuse a role that has been found to be objectively acceptable; and
3. individual circumstances of the employee must be considered when deciding what is acceptable.

For option 1, this meant that the additional 20 minutes of travel time to and from work where Mr Varcoe would be caught up in traffic was “inconvenient and onerous” was unacceptable.

In contrast, the FWC decided that option 2 was a suitable redeployment opportunity even though it only extended Mr Varcoe’s employment by a further 3 months.

On the balance of various factors such as the length of Mr Varcoe’s service, the fact that Eagers did not require him to work out his notice period, and that he obtained alternative employment quickly after his redundancy with Eagers, the redundancy payment was reduced from 12 weeks to 4 weeks.

what does this mean for employers?

The decision highlights the many factors which play a part in determining whether alternative acceptable employment opportunities are in fact acceptable. Even where the employee was offered a company car and fuel allowance as part of the alternative role, an extra 20 minutes of travel time each way was deemed unacceptable. Other factors which are also taken into consideration are duties, position title and renumeration.

Our Employment, Safety and Migration team are well placed to identify alternative employment arrangements for employees whose roles are made redundant. Please do not hesitate to contact us to speak with our experienced team.