In a recent decision of Fair Work Australia, a long serving employee has been awarded $25,000 in compensation for his unfair dismissal from dealership giant A P Eagers.
The employee was on an annual a package of around $100,000 and a decision was made to restructure the business which resulted in his position no longer being available. However, a new position was created which had an annual salary of $55,000.
The company made a decision not to offer the new position to the employee on the basis that it thought doing so would amount to a constructive dismissal of the employee's employment. The company was concerned that given the disparity between the two positions, the employee would be able to argue that the employer had terminated the employee's employment.
Fair Work Australia found that the company should have offered the new position to the employee, and that it was wrong of the company to assume that the employee would have rejected the position because it involved lower seniority and a lower rate of remuneration.
Also of relevance in this case was that the employee had been engaged for 24 years and was 62 years of age. This meant that his ability to obtain other suitable long term employment was restricted.
An individual's circumstances were also taken into account in the recent case of Quinlivan v Norske Skog Paper Mills Australia Limited. That case involved the termination of employment of an employee for breaches of workplace safety. However, because the employee had worked at the mill for over 20 years, was middle aged and had poor job prospects due to poor education, the dismissal was considered to have a "disastrous effect" on the employee's livelihood. Accordingly, the dismissal was deemed to be harsh, and the employee was reinstated.
Whenever a situation of redundancy arises, it is always important to look to see whether or not there are any other positions that the employee could possibly perform having regard to his or her skill and capability. It does not matter that an available position is of much lower status and remuneration. If such positions exist, then the employee should always be given the option of retaining employment with the company, albeit on less advantageous terms and conditions of employment.
In circumstances where the employee accepts less advantageous terms and conditions, it is likely that the employee will not be entitled to redundancy pay. It is important to check the relevant modern award to see if this is the case.
The decision in A P Eagers demonstrates Fair Work Australia's desire to preserve employment relationships wherever possible and to consider termination only as a final resort once all other options have been exhausted.
It is good practice to always offer an employee redeployment options, even if it is possible that the offer will be rejected. It is also to the employer's benefit that the employee's knowledge is not lost and recruitment costs are avoided.
Should you have any questions in relation to this decision please do not hesitate to contact Shawn Skyring on telephone 9226 9831.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
