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Employment Law - Redundancy - Unfair Dismissal - Should Employers Offer a Lower Paid Position to Employees?

Date: November 29, 2011

Authors: Patrick Mulligan B.A., LL.B.

The purpose of this article is to review Margolina v Jenny Craig Weight Loss Centres Pty Ltd [2011]FWA 5215. This case addressed issues of whether it would have been reasonable to redeploy the employee into a lower paying position when she was made redundant. She argued that it was not a genuine redundancy as the employer never offered her alternative employment in a lower paid position.

Facts: The applicant was employed in a managerial type role. Her base salary was $60,000 her income was moderately increased by way of bonuses. In the last financial year her income was $220,000.00. The employer was taken over and her position was reviewed. The employer decided that a new role would be created that effectively merged her role and another colleague. As a result she was made redundant. Some noteworthy facts were that she had an 18 month year old daughter and owned a home in East Malvern.

Legal Issues. This case considered whether or not it would have been reasonable in all the circumstances to offer the employee a lower paid position as required by s389(2)?

The Decision.

The applicant argued that it was not genuine redundancy and that she was unfairly dismissed. She argued that for the purpose of s389(2) she would have accepted redeployment to a lower paid or even part time position in order to allow her more time to spend with her 18 month year old daughter. There was further corrobative evidence to this effect including the fact that she had accepted a much lower paying job within a few weeks of her termination, that being $55,000 as opposed to her previous salary of $202,000 the previous financial year with Jenny Craig. The employer argued that it was a genuine redundancy.

Commissioner Ryan examined the relevant subsections of s389(1) and (2). The major issue was that the employer did not offer her redeployment into lower paying positions and entry level clerical positions that were available. The commissioner found that it would have been reasonable in all the circumstances for the applicant to be redeployed into a lower position and all that was required was required by the employer was to offer alternative lower paid positions rather than presuming to know the mind and financial circumstances of the employee. It was held that the test is an objective test having regard to far more than simply what the employer has arrogated to themselves. I.e. presuming an employee would be insulted with an offer of lower paid employment beneath their skill and salary level.

Observations for employers.

This case was largely distinguished on its facts. In other cases there may be reasonable evidence suggesting an employee may not accept alternative employment. However, the judgment stands for the principle that it is prudent to consult the employee on the possibility of redeployment to lower paid positions and not assume that it will necessarily be an insult to the employee. In other words, the exit strategy should incorporate the option of redeployment into lower paid positions and the employee needs to confirm they are not interested in order to ensure that the redundancy is genuine.

For employees.

If you have been offered a redundancy package and are concerned about future employment you should ask about possibilities for redeployment into alternative positions. If you are willing to accept lower pay and positions are available, the employer is obligated to provide you with suitable alternative employment pursuant to s389(2).

Disclaimer.

You cannot rely in this contents of this article for legal purposes or legal advice. In the event that you have employment law queries please contact LAC Lawyers for an appointment.

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