The Fair Work Commission recently ruled that employers cannot bypass redundancy payments simply by securing new roles that offer significantly lower base salaries. This landmark decision clarifies the stringent requirements for what constitutes ‘other acceptable employment’ under labor laws. When a business undergoes restructuring, management often seeks to mitigate financial liabilities by finding alternative placements for displaced staff. In the case involving Creative Image Landscapes Pty Ltd, the company attempted to utilize Section 120 of the Fair Work Act 2009 to exempt itself from paying redundancy after facilitating new positions for two long-term workers at a partner firm. The employer argued that the continuity of work should negate the need for severance. However, the ruling emphasized that finding a new job is insufficient if financial terms are worse. This signals a shift toward protecting the total economic value of a work contract rather than just the job.
Defining Acceptable Work
Central to the legal dispute was the case of a veteran employee with nine years of tenure whose compensation was significantly reduced in the proposed role. The new position offered a base hourly rate of $45.00, representing a sharp decline from his previous earnings of $50.50 per hour. Over the course of a standard working year, this gap would have resulted in a total income loss of $11,440 for the worker. The employer attempted to justify this discrepancy by highlighting secondary benefits, such as a supposedly shorter commute and the availability of frequent overtime opportunities. Nevertheless, the Commission remained unconvinced by these arguments, noting that the employee was primarily site-based, which made commute times inherently variable and unreliable as a benefit. More importantly, the ruling established that overtime cannot be used as a valid offset for a lower base salary, as it forces the individual to perform additional labor to get paid for their effort.
A second worker involved in the application faced a similar scenario where the base pay rate was roughly $4.00 lower than his previous arrangement. In this specific instance, the employee had expressed an interest in transitioning to a casual schedule to pursue a tattoo apprenticeship, which the employer cited as evidence that the new role met the worker’s needs. Despite this personal preference, the Commission maintained that the underlying offer of permanent employment was still a step down in terms of both pay and professional responsibility. The ruling clarified that while a specific role might suit an individual’s current lifestyle or temporary goals, it does not necessarily meet the legal definition of being objectively acceptable. This distinction is vital because it prevents companies from using a worker’s personal circumstances as a justification for offering inferior contracts. The focus remains on whether the new position provides a comparable standard of living for the staff now.
Salary Parity and Law
The decision underscores a clear trend in how labor authorities prioritize base salary over secondary perks or non-monetary benefits. During the proceedings, various concerns were raised regarding job security, the loss of seniority, and the high cost of specialized tools required for the new positions. While these factors contributed to the overall assessment, the Commission found that the significant disparity in base hourly rates was, by itself, enough to disqualify the alternative offers. This creates a high bar for human resource professionals who must now ensure that any redeployment strategy includes a thorough financial audit of the proposed roles. Building on this foundation, it is evident that the legal system is moving away from a broad interpretation of employment continuity toward a more granular analysis of economic parity. Employers can no longer assume that a lower-paying job is better than no job in the eyes of the law during a period of corporate change for a firm.
The Commission eventually dismissed the application from Creative Image Landscapes in September 2026, which preserved the rights of the workers to receive their full redundancy entitlements. This outcome established a definitive guideline for corporate leaders to follow when managing workforce reductions. It was demonstrated that any alternative job placement must be financially and professionally equivalent to the original position to avoid legal challenges. Moving forward, organizations were encouraged to conduct rigorous comparisons of base salaries, ignoring potential overtime or discretionary bonuses that might mask a core pay cut. Legal experts advised that transparency in the redeployment process was essential to minimize the risk of litigation. By documenting how a new role matched the previous one in terms of duties and compensation, companies managed to navigate these transitions more effectively. Redundancy pay remained a protected benefit that could not be easily bypassed by the firm.