Meaning of "significant difference" for redundancy

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.

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.

More on Termination & Dismissal

An employer's rights: Surfing all the day	Driver lost license
Dealing with absent employees	Importance of procedural fairness
Must consult in redundancy dismissals	Dismissal must be procedurally fair
Misconduct discovered after dismissal	Another procedural fairness example
Dismissed for benefit fraud	Terminated before started
The danger of secret witnesses	Expired employment contract
Cannot intimidate employer	Cannot rely on police enquiry
Reasonable notice of redundancy	Contractural obligation must be met
Reinstatement and workplace democracy	Employment and criminal investigation
Attack not always good defence	Dismissal of persons in authority
Employee responds by going on offensive	Legality of secret video surveillance
ERA classifies contractor as employee	Redundancy law unchanged by ERA
Loss of use of company car	Significant difference
Resolution of criminal charges	Redundancy and changed hours
Discrimination for being non Asian	Cannot take retaliatory action
Failing to meet sales targets	Misconduct outside of work
Abuse of Internet & Email	Suicide and communication
Redundancy definition	Unjustified dismissal for pornography
Abandonment of employment

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