In a recent case, the FWC found that an unsuitable redeployment offer did not justify reducing an employee’s redundancy pay. How can employers ensure their redeployment policies stand up to scrutiny?

In times of cutbacks, identifying opportunities for redeployment can be a strategic way to retain valuable talent and prevent job losses. However, when issuing a redeployment offer, failing to consider the suitability of the new role can open employers up to legal challenges, as highlighted by a recent case heard by the Fair Work Commission (FWC). 

In this case, a building services company filed an application with the FWC to reduce an employee’s redundancy payment on the grounds that the employee had rejected the offer of redeployment to an alternative role. 

However, the FWC’s investigation revealed that the employer had not adequately assessed the employee’s ability to perform the new role, and had withheld essential information about the role from the offer. As a result, the employer’s bid to reduce the payout was unsuccessful.

“This case is a good reminder to HR of the general factors that need to be considered when you’re looking at what constitutes acceptable redeployment,” says Amy Zhang, Team Leader and Executive Counsel at Harmers Workplace Lawyers.

“It’s also a good warning to employers to not simply offer any old job just to try and avoid payment of redundancy pay.”

Redeployment offer was “substantially different” from existing role

The employee in this case had been working for the business as a project manager for around eight years when, in January 2023, he was informed of the company’s impending closure.

Soon afterwards, he was offered an alternative role at an associated hardware company. The new role was in business development management, which significantly differed from the employee’s original role. Citing his lack of suitable skills and experience, the employee rejected the offer. 

When his employment was officially terminated in late 2023, the employer did not pay out the agreed redundancy sum of $40,000. Instead, it filed an application with the FWC to reduce the payment to zero. It argued that it had provided the employee with an alternative employment opportunity, which the employee rejected, and claimed financial incapacity to pay the redundancy.

During its investigation, the FWC examined whether the new role was suitable based on an assessment of various factors, including job content, employee skills and experience, working conditions, remuneration and location.

Despite similarities in basic employment terms such as salary and working hours, it found that the core functions of the roles were “substantially different”. The new role involved responsibilities that the employee has no experience with, nor had he shown interest or competence in those areas. 

“The more information that you can impart about the process involved, the more that may help with managing stress and anxiety about the situation.” – Amy Zhang, Team Leader and Executive Counsel at Harmers Workplace Lawyers

Crucially, the employer also failed to disclose essential information about the new role, including a hefty annual sales target of $2.5 million. This lack of transparency was a major factor in determining that the redeployment offer was not suitable.

“Employers need to be careful to give the complete picture of what the new proposed role looks like,” says Zhang. 

“If you give a half-hearted or incomplete picture, and you’re not clear about the duties and responsibilities, the Commission could look at that and say it’s not acceptable alternative employment.”

Regarding the employer’s claim that it was financially incapable of paying out the redundancy package, the FWC noted that the employer’s associated entities were financially intertwined, suggesting potential sources of funds were available.

Ultimately, it concluded that the employer had not met the necessary conditions to warrant a reduction in redundancy pay, resulting in the preservation of the employee’s full entitlement of $40,000 in redundancy pay.

4 tips to manage redeployment offers fairly and legally

The current economic climate means many leaders are facing the challenge of cutting costs and headcount without opening their organisations up to legal, ethical or reputational risk. 

When handled correctly, redeployment can provide a mutually beneficial way to redirect talent to the parts of the business where it’s most needed. However, in light of the FWC’s ruling on this case, there are a number of legal and compliance considerations that employers should take into account when issuing a redeployment offer. 

To protect your organisation, Zhang recommends the following:

1. Ensure clear communication and documentation

The employer’s crucial misstep in this case was its lack of transparency, communication and documentation around the redeployment offer, says Zhang. 

“If an employer properly consults with an employee, these sorts of things can be discussed and managed in a positive and amicable way, and it doesn’t lead to this level of distrust.”

HR should also ensure job offers provide a thorough and accurate representation of the new role.

“At the minimum, you should be providing information about the specific duties, responsibilities, sales targets or other performance indicators, if there are employees that you need to be managing and overseeing – as much information as possible about the particular role to allow the employee to make an informed assessment. It’s not enough simply to say, ‘Here’s the job title, and this is what we loosely think it might involve.’”

2. Assess the suitability of an alternative job offer from all sides

When considering the suitability of an offer of redeployment, Zhang stresses that the assessment should not be based merely on assumptions or broad categorisations of work duties.

“The Commission can consider any relevant factor [to determine suitability], and it will depend on the particular job you’re looking at.

“If you’re offering a job that’s in a very different location to the previous role, or that has different shifts or hours of work, all of those things will be relevant. So it’s not just about the job and the duties and responsibilities. Sometimes job titles can be very important as well, [particularly] if it looks like it’s a demotion.”

3. Consult the employee involved

Engaging with affected employees during a redundancy or redeployment process is crucial to achieving a fair outcome, says Zhang. 

“Even if there’s no strict obligation under the law, it’s still best practice to consult because it engenders trust, and it can also help create new ideas about other ways to retain or redeploy the employee,” she says.

“It’s already a very stressful, distressing process for employees, and the more information that you can impart about the process involved, the more that may help with managing stress and anxiety about the situation.”

4. Provide adequate training and support

In addition to providing adequate information about the new role, demonstrating how you will support the employee through their transition is essential for a smooth redeployment, particularly if the role requires them to acquire a new skillset.

For example, if their new role requires more face-time with a client, how will you support them to develop their presentation, communication or influencing skills?

Equally important is ensuring that employees are properly supported when a suitable redeployment opportunity is not available.

“Make sure that you’re keeping an eye on your safety obligations,” says Zhang. “It’s always best practice to offer EAP services. We also quite often see [employers using] outplacement services as well to assist employees to be able to transition and find new employment.”

By keeping these legal considerations in mind, employers can design redeployment policies that stand up to scrutiny and provide maximum benefit to both parties.

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