BlandsLaw - Blog posts from genuine redundancy
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Is refusing to accept a pay-cut a redundancy situation?

 

Employers are urged to exercise caution when making an employee’s position redundant. In a recent case,[1] the FWC has made it explicitly clear that a dismissal will not constitute a genuine redundancy if it arises after an employee has refused to accept a pay-cut. Employers will most certainly land themselves in hot water if they simply seek to replace a “redundant” employee with someone at a lower cost.  

Parabellum, who provided emergency response services to Chevron, sought to reduce four workers salaries by 13%, when Chevron cut its contract prices. The workers refused to accept the pay-cut and their roles were subsequently made redundant as part of an operational restructure. The employees argued their dismissal was not a case of genuine redundancy because their positions were filled by newcomers on lower salaries.

For a dismissal to be a case of a genuine redundancy, the Fair Work Act 2009 (Cth) (“FWA”) states that the employer “no longer requires the job to be performed by anyone”.

Parabellum urged the

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We regularly provide advice around redundancy and know from practice that it can be an area fraught with pitfalls. To meet the test for genuine redundancy under the Fair Work Act the redundancy process must include the employer exploring, with the employee, any available redeployment options. Related to this concept is that of ‘alternative acceptable employment’ which may affect the redundancy pay.

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