The UK Government has published legislation, which will ensure that all furloughed employees receive statutory redundancy pay based on their normal wages, rather than a reduced furlough rate.

The Employment Rights Act 1996 (Coronavirus, Calculation of a Week’s Pay) Regulations 2020 (the Regulations) ensure that various statutory entitlements based on a week’s pay and connected

If an employee is entitled to redundancy pay on termination, but their employer has obtained other acceptable employment for them, the employer can apply to the Fair Work Commission (FWC) for an order under the Fair Work Act 2009 (Cth) (FW Act) to reduce (including to nil) the amount of redundancy pay that is due to the employee.

The employer is required to demonstrate that:

  • it “obtained” the alternative employment for employees; and
  • the alternative employment was “acceptable”.

In the recent decision of Sodexo Australia Pty Ltd T/A Sodexo [2016] FWC 4012, Deputy President Sams of the FWC considered the second test of whether the alternative employment was “acceptable”.

Section 119(1)(a) of the Fair Work Act 2009 (Cth) states that an employee is entitled to be paid redundancy pay by the employer  if the employment is terminated at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour (the Exception).

The Exception was most recently considered by a Full Bench of the Fair Work Commission in December 2015 in Compass Group (Australia) Pty Ltd v National Union of Workers and another [2015] FWCFB8040 (Compass) in the context of employees whose employment was terminated as a result of the employer no longer holding a particular client contract, which those employees were specifically employed to service.  The employer, Compass,  provided  fire rescue services to the Department of Defence and in the circumstances of this case, had made a commercial decision not to tender for a replacement contract in respect of those services.  Compass relied on the Exception and withheld redundancy pay from the terminated employees.

The Full Bench said that in order to determine whether the Exception applies in a given case it is necessary to:

  1. Consider the normal features of the business; and
  1. Then determine whether the relevant terminations are properly described as falling within the ordinary and customary turnover of labour in that particular business.

A recent decision of Judge Cameron of the Federal Circuit Court (the Court), in the matter of Fair Work Ombudsman v F.L. Press Pty Ltd & Anor[1] (FL Press), has highlighted a potential discrepancy between the approach of the Court and that of the Fair Work Commission (FWC) to redundancy pay entitlements under the National Employment Standards (NES) where an employee’s position becomes redundant and the employee consents to a transfer to a different position with the same employer.

Employers may have granted entitlements to redundancy pay through enterprise agreements in wider situations than provided by the National Employment Standards (NES). The Full Bench of the Fair Work Commission has ruled that the entitlement to redundancy pay in an enterprise agreement should not be ‘read down’ to exclude the ‘ordinary and customary turnover of labour’ concept, which can be found in the redundancy provisions of the NES.