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
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
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
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.
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