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Relocation can attract redundancy payments

Excerpts from this article first published in ‘Human Resources’ Magazine, Issue 79, 3 May 2005

A recent decision of the Australian Industrial Relations Commission (Commission) is a reminder that, when deciding whether to relocate to new premises, employers should carefully consider if the employees can be required to relocate.

In Han Jian Liu v NHP Electrical Engineering Products Pty Ltd, the Commission determined that NHP Electrical Engineering Products (NHP) could not require Mr Liu to relocate from its premises at Richmond, Victoria to new premises at Laverton, Victoria. Consequently, Mr Liu was entitled to a redundancy payment under the certified agreement that applied to him.

In reaching its decision the Commission considered both the terms of the certified agreement and Mr Liu’s contract of employment.

NHP argued that Mr Liu was not entitled to a redundancy payment because:

1. it still wanted him to perform the same work on the same terms and conditions of the certified agreement, just at a new site;
2. the certified agreement allowed it to require him to relocate;
3. requiring him to relocate to Laverton was reasonable in the circumstances. There were sound operational requirements for the relocation and employees were to paid a relocation allowance of $650 and provided with free bus transport; and
4. it was not an express term of his contract to work at Richmond, so the requirement to relocate to Laverton should be an implied term of his contract.

The Commission disagreed and determined that Mr Liu was entitled to a redundancy payment because:

1. although the certified agreement provided that NHP would pay a transfer allowance upon relocation to Laverton, it did not go so far as providing that NHP could require Mr Liu to relocate;
2. when taking into account Mr Liu’s personal circumstances, such as getting his children to school and caring for his sick elderly mother, noting that the Commission is obliged to have regard to measures aimed at helping workers reconcile their employment and family responsibilities, the relocation to Laverton was not reasonable; and
3. it was a term to be implied into Mr Liu’s contract that the location of his employment was at Richmond.

HR Tips

In order to minimise the risk of having to make unforseen redundancy payments if it becomes necessary to relocate their operation, employers should ensure that:

• their contracts of employment expressly provide a right to direct employees to relocate to alternate premises;
• relocation payments and other benefits negotiated by unions and included in certified agreements are in exchange for employees agreeing to relocate their employment; and
• they carefully consider each individual employee’s circumstances to determine whether the relocation is reasonable, paying particular regard to employees’ family responsibilities.