The Fair Work Commission has held that six Darrell Lea employees were entitled to redundancy pay, in a situation where the employees’ workplace was closed and their personal circumstances meant that it was not reasonable for Darrell Lea to require them to relocate to a site 36 km away from the original workplace.

Implications for employers

In a potential redundancy situation, employers should ensure that they consider the personal circumstances of their employees when considering whether a role is an offer of reasonable alternative employment. It should be kept in mind that increased distance and travel time to a new workplace may render an offer of employment unsuitable, particularly where the employee has personal commitments or other circumstances which conflict with such demands.

Background

The Darrell Lea (DL) sweet manufacturing facility at Kogarah, in Sydney’s south (Kogarah Site), was de-commissioned. A DL warehouse 36 km away in Ingleburn was converted into a manufacturing facility (Ingleburn Site). DL offered Kogarah Site employees redeployment to the Ingleburn Site. A $70 travel allowance, to be paid for a period of 12 months, was offered for employees to assist them with travel to the Ingleburn Site.

Six of the employees (Employees) advised DL that working at the Ingleburn Site was not suitable for them for reasons including family commitments, personal health issues, increased travel time and inability to drive a car (Objections). The cost of travel was not raised by the Employees as an objection. DL rejected the Objections and advised the Employees that they would not be paid redundancy pay in the circumstances.

The employees notified a dispute under the DL Employment Pty Ltd Enterprise Bargaining Agreement2012-2015 (DL Agreement).

During the course of the hearing, DL proposed to remove the 12 month limitation on the making of the $70 travel allowance. It also made a conditional offer that, as an alternative to the travel allowance, it would provide a bus service for day-shift employees, driving them from the Kogarah Site to the Ingleburn Site and return.

Decision

Senior Deputy President Drake found in favour of the Employees, holding that:

  • the Employees’ positions at the Kogarah Site were redundant as a result of the closure of the Kogarah Site;
  • DL had failed to adequately consult with Employees regarding the redundancies, as required under the DL Agreement;
  • DL’s belief that it could vary the Employees’ location under their contracts (a matter not raised with the employees and which was relevant to whether there had been adequate consultation) meant that it failed to consider the Employees’ personal circumstances;
  • the Objections raised by the Employees related not to the cost of travel, but to the importance of being able to work at a location close to home. For example, some Employees wished to be close to home so that they could assist elderly or disabled family members at short notice;
  • the distance between the Kogarah Site and the Ingleburn Site by car amounted to 40-55 minutes one-way during traffic, or 38-40 minutes one-way with no traffic. The additional travel time was substantial; and
  • DL’s proposed solutions (the travel allowance and bus service) were directed to mitigating the cost of travel. The bus service proposal was unsuitable in any case, as travelling that distance by bus was excessive, particularly in the case of employees who did not leave close to the Kogarah Site. Further, for the three Employees who were night shift workers, it would require them to transfer to day shift and suffer a corresponding reduction in income of $312 per week.

Accordingly, the offers of alternative employment made by DL were found not to be reasonable and the Employees entitled to redundancy payments under the DL Agreement.

Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers Union (AMWU) v DL Employment Pty Ltd [2014] FWC 4914