In a recent case, the Australian Industrial Rela tions Commission (AIRC) refused an applica tion by Tasman Sheepskin Tannery Pty Ltd (TST) to avoid paying severance pay to redundant em ployees under the Tanning Industry Award 1999.
The employees were made redundant when a fire at its premises forced TST to cease produc tion. The Award provides that an employer may make an application to the AIRC to have the gen eral severance pay due to redundant employees varied or avoided if “the employer obtains accept able alternate employment for an employee”.
A note to the Workplace Relations Act Regu lations says “the acceptability of alternate em ployment in a particular matter is an objective assessment that requires the Commission to consider matters including pay, hours of work, seniority, workload and other matters particular to the application”.
TST argued that it had obtained acceptable alternate employment for the redundant employ ees because it had obtained offers of employ ment for the employees at another tannery. Commissioner Spencer of the AIRC disagreed.
The Commissioner noted that the jobs of fered to the employees were generally of a lower skill level and paid less than the employees’ jobs at TST. Also, the offers made by the new employer were for casual employment. The redun dant employees had been employed as perma nent employees at TST.
The Commissioner observed that “the al ternate positions did not provide reasonable options of ongoing employment. Three of these employees had considerable years of service and all have had difficulty in finding alternate employment.”
HR tips: For alternate employment to be ac ceptable, it is necessary the employment is comparable when factors noted in the regulation quoted above are taken into account. The AIRC has held that a job that is of minor disadvantage to an employee may still be acceptable.
The AIRC has also held that an employer will not have “obtained” acceptable alternate em ployment for an employee if it has done little more than arrange interviews and given the em ployees time to attend those interviews.
The employer must “make sufficient effort” to “procure or gain” acceptable alternate em ployment for a redundant employee. It is not necessary that the employee accepts the offer of employment.
By Gordon Jervis, senior associate, Australian Business Lawyers. Tel: 02 9458 7581