In these challenging economic times, redundancies are on the increase. With it comes a common question: If I, as a non-small business employer, find my retrenched employee an alternative role, are they still entitled to redundancy pay?
The question is a reasonable one, but it comes from a common misconception: that an employer finding a retrenched employee alternative employment automatically absolves the employer from paying redundancy pay (where it would otherwise be payable). It does not. Any reduction (including to nil) must occur via an employer application under section 120 of the Fair Work Act 2009 (Cth) (FW Act).
As a recent Fair Work Commission case illustrates, an application of this kind is also by no means guaranteed to succeed, and can fail if the alternative employment is not objectively “acceptable”, including having regard to the employee’s circumstances.
The case
On 15 October 2026, Deputy President Easton delivered a decision in Sydney Night Patrol & Inquiry Co Pty Ltd trading as Certis Security Australia v Sarah El Niz [2026] FWC 3951, dismissing an employer’s application to reduce redundancy pay to nil under section 120 of the Fair Work Act.
Background
Ms El Niz had been employed by Certis for almost four years. In 2026, Certis made her Roster Liaison Officer position redundant and offered her an alternative role as a Workforce Planner. Her employment ended on 28 May 2026.
Ms El Niz was otherwise entitled to eight weeks’ redundancy pay under section 119 of the FW Act. Certis sought an order under section 120 to reduce that redundancy pay to zero on the basis it had “obtained other acceptable employment” for her.
Key issue: Was the alternative employment “acceptable”?
In its decision, the Commission set out established principles on section 120 applications, including that:
- the question of “acceptable” alternative employment is generally an objective one, determined by reference to objective factors;
- redundancy pay is a statutory safety net entitlement, and any reduction is a derogation from that minimum standard;
- the employer bears the evidentiary burden; and
- the Commission must consider the employee’s circumstances (including factors such as the nature of the work, location, hours, and other terms and conditions).
While Certis preserved key terms (including salary, hours, employment status and seniority), Ms El Niz rejected the role because Certis would not guarantee continuation of flexible/hybrid arrangements that had allowed her to work from home for the last two years of her employment.
On the evidence, the Commission accepted that the redeployed role would require a substantial increase in commuting time – around four additional hours per day factoring in the employee’s ongoing WFH arrangements in her retrenched role – and that Ms El Niz had caring responsibilities.
Taking these matters into account, the Commission was not satisfied the alternative position was objectively acceptable. The section 120 application was dismissed, and redundancy pay remained payable.
If you have questions about how section 120 applications may affect your business, please contact a member of the Emplawyer team.
