It is common for employees who are declared redundant to be offered a new position with their employer. Many employment contracts oblige the employee to accept the new
position unless it is "significantly" different than his or her former position. If the employee does not accept the new position, he or she may be dismissed and forfeit his or her right to redundancy compensation.
Such cases are always difficult as they involve making a judgment call as to whether the two positions (the old and the new) are "significantly" different. While the precise
wording of employment contracts vary from employee to employee, a recent Employment Court case provides some guidance as to what the word "significant" means and factors that may be considered in deciding whether two positions are "significantly"
different. Since 1992, the Westpac Bank had employed Craig Stephen in various roles, the most recent being as a senior analyst. Mr Stephen was employed on a collective employment
contract that provided for redundancy, and the payment of redundancy compensation. The contract went on to provide that Mr Stephen’s would forfeit his right to redundancy
compensation if he was offered, and he declined to accept, a "directly comparable position". However, he would not forfeit his right to redundancy compensation if the new
position involved a "significant change in duties significant enough for it to be unreasonable taking into account [his] skills and abilities".
Following restructuring, Mr Stephen’s position was declared redundant and he was offered a new position as a Relationship Manager. He declined Westpac’s offer and resigned to take up a new job with one of the Bank’s customers. He claimed redundancy
compensation, but Westpac refused to pay it on the basis that he had declined to accept a "directly comparable position".
Mr Stephen’s took a case to the Employment Tribunal and the Tribunal ordered Westpac to pay his redundancy compensation. In doing so, the Tribunal held that, although Mr
Stephen had resigned, the real initiative for his termination had come from Westpac. It also held that the new job offered to Mr Stephen involved a significant change in duties
significant enough for it to be unreasonable for him to accept it taking into account his skills and abilities. The Tribunal based its assessment on the difference in work content
and responsibilities (admitted by Westpac to be about a 20% difference) and the absence of any but vague promises of training and support.
Westpac appealed to the Employment Court. It criticised the Tribunal’s finding that it had initiated Mr Stephen’s termination as implying that an employee could declare himself
redundant by resigning. It argued that the Tribunal was wrong to hold that an admitted difference of 20% between the two positions was significant enough within the meaning
of the contract to enable Mr Stephen to take advantage of the right to turn down a significantly different position.
| The Employment Court dismissed Westpac’s appeal. It held that the Tribunal was correct
in finding that Westpac had initiated Mr Stephen’s termination because his resignation was not voluntary. "Once his position was declared redundant and none other was offered that he was prepared to accept, the die was cast and it was open for him to
discuss the terms of his exit - he merely reacted to his position being declared redundant by [Westpac]" Judge Shaw said. | |
Judge Shaw was also not prepared to overturn the Tribunal’s finding that the two positions were significantly different. She stated that the Tribunal’s assessment was one
of fact and degree and that it was not open to the Court to arrive at its own view unless the Tribunal’s assessment could not be sustained on the evidence, which was not the case.
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Judge Shaw noted that under his contract, Mr Stephen could decline a job offer without forfeiting his redundancy compensation if the new job involved a "significant change in
duties significant enough for it to be unreasonable taking into account [his] skills and abilities". The word "significant" indicates "an intention to focus on the seriousness of
the impact of the change as a condition of the clause operating to preserve the right to compensation. The difference must be important - and it must be in addition so
important as to render it unreasonable to expect the employee to accept the position given the employee’s existing skill base or potential. It is true that the Tribunal
considered the absence of any training but that is a valid consideration having regard to the reference in the clause to the employee’s abilities, as well as to his already acquired skills" she said.
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