What does ‘suitable role’ mean in a genuine redundancy?

A genuine redundancy for employment law in Australia means the dismissal of an employee by the employer because they no longer need the position in question.

Fair Work Australia (FWA) defines redundancy as: “where an employee’s job is no longer required to be done by anyone because of changes in the operational requirements of the employer’s enterprise.” The reasons a business does this vary, including restructuring or reorganisation, technological change, automation, outsourcing, a decrease in demand, completion of a particular project, or closure of the business.

It is critical to ensure that any redundancy is “genuine” to prevent legal claims, including unfair dismissal, breach of contract, or other workers’ compensation claims.

Recently, the issue of dismissal was resolved when the employer claimed redundancy as a defence.

Failure to ‘offer suitable work’

The worker was a full-time local delivery truck driver working for the employer’s family-owned and operated transport business. His role became redundant after the latter lost a contract with a client.

The employer said that in one of its emails, it told the worker the following: “As you are aware, the position of local driver is at this stage no longer available due to unforeseen circumstances; we understand your frustrations and endeavour to provide you with this role as soon as one becomes available.”

The employer said that it offered alternate interstate delivery and yard work which the worker did not accept because it involved a “reduction in duties, responsibilities and not what [he] was employed to do.”

He argued that he was constructively dismissed as  the employer breached his contract by “failing to offer suitable full-time work.”

Meanwhile, the employer said it tried to find ways to retain the worker.

Was there a breach in the contract?

The Fair Work Commission (FWC) said that the employer committed a breach of the contract when it failed to provide the worker with full-time work.

The FWC said that redundancy can give rise to a repudiation, and the  relevant test is “whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation of either the contract as a whole or of a fundamental obligation under it.”

The commission found that his position became redundant in the company due to reduced operational requirements.

However, the FWC said that the worker was “ready, willing and able to work the terms of his contract,” and yet, it did not provide any suitable, alternative role or otherwise redeploy him.

What is a ‘suitable alternative role’ in a genuine redundancy?

Under the FWA, an employer can seek a mutually agreed redundancy, which may include an agreement to take up alternative employment. The alternative job must be suitable, and the employee must be able to perform the position (with or without reasonable adjustments).

Additionally, the employee must be able to earn at least the same amount of remuneration and benefits as they were receiving in their original role.

Regarding the role the employer offered, the FWC said that the proposed jobs “would constitute a significant alteration of the terms of the contract.”

It said the worker had the right not to accept the alternative work because the variation was substantial.

The commission also said the worker did not resign but was “constructively dismissed.” It has since referred the matter to proceed for merits determination.