The FWC has dismissed an employer’s application to reduce an employee’s redundancy pay entitlement, on the basis that an offer of employment rejected by the employee involved a significant pay cut and was therefore not “acceptable alternative employment”.

The employee worked as a housekeeping supervisor at a hotel, earning $21.00 per hour. The employer decided to outsource its housekeeping work to a cleaning company, who ultimately offered the employee a housekeeping attendant job at the rate of $17.05 an hour. The cleaning company stated that the employee’s pay had been reduced because she had wished to relinquish her supervising position. The employee declined the cleaning company’s offer of employment. The employer offered the employee a partial redundancy payment calculated on the difference between the supervisor and attendant rates. The employer applied to the FWC to reduce the full redundancy payment, on the basis that the cleaning company’s offer of employment constituted “acceptable alternative employment”.

The FWC found that the employee should be paid her full redundancy entitlement, on the basis that:

  • it was irrelevant that the employee may have wanted to relinquish her supervisor position, “the fact is, she never did”;
  • it needed to determine what work the employee was “actually performing and what she was being paid at the point the offer of alternative employment with the [new employer] was made”; and
  • the test of “acceptable alternative employment” is “not whether the employee can carry out the new employment”.  The employee would "suffer a significant cut in salary as a result of accepting the offer”, so it could not be characterised as “acceptable alternative employment”.