Choosey can be costly

The issue of redundancy looms where an employer loses work to a competitor as part of a tender process.

Often what occurs is that the employees of the employer, which has lost the work can apply and are accepted as employees of the employer, which has won the work.

Where an employer is able to redeploy an employee either within its business or obtain work for the employee with another employer, and the employee does not co-operate in that process, the employee may not be entitled to a redundancy payment if employment is ultimately terminated.

This much is demonstrated in the decision of the Fair Work Commission in Cleandomain Pty Ltd  [2014] FWC 5243.

Christine Flavell was a cleaner employed by Spotless at Fountain Gate Shopping Centre. In May 2013 Spotless lost the contract to clean there. At the time Ms Flavell was on extended sick leave, which did not finish until mid-June 2013.

Spotless representatives contacted Ms Flavell by phone and letter to advise her of the change and that she could apply for a job with the new cleaning contractor by attending an interview or be redeployed at another Spotless site.

Ms Flavell did not respond meaningfully until after the new contractor had filled positions at Fountain Gate. By that time Spotless did not have any positions that suited the hours Ms Flavell wanted to work and were in easy travel of Fountain Gate.

On 16 July 2013 Ms Flavell received a letter from Spotless stating that she had been terminated due to retrenchment and citing her lack of co-operation that “has the consequence that you declined offers of acceptable alternative employment with the incoming contractor … and the absence of a suitable alternative position being available at another Spotless site”.

The Commission found that Ms Flavell was more interested in being paid out rather than continuing in employment. Because of her period of service she was entitled to eleven weeks as a redundancy. Her lack of co-operation was her failure to attend an interview with the new contractor. All other Spotless employees at Fountain Gate who attended interviews with the new contractor were given jobs. The fact that she was on sick leave when the interviews took place did not count in her favour as she was fit enough to return to work five days after the interviews had taken place.

Cleandomain (which had been taken over by Spotless) successfully argued that section 120(1)(b) of the Fair Work Act applied and because it had done all it could to obtain other acceptable employment for Ms Flavell its obligation to pay her redundancy on termination of employment could be reduced to nil.

The lessons are:

1.         Employers should attempt to redeploy employees to minimise their obligation to pay redundancy; and

2.         Employees should not assume that a redundancy will be paid to them if there is other work to be had.

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