Franchisees to exercise caution when transferring employees between worksites
by
DibbsBarker
A recent decision of the Australian Industrial Relations Commission highlights the importance of ensuring that employment contracts (including workplace agreements such as AWA’s) expressly allow a franchisee to transfer employees between worksites.
If the location of the work to be carried out by the employee is fixed at a particular worksite by an employment contract, a direction to transfer may constitute a termination of the contract, potentially entitling the employee to a redundancy payment.
In determining whether a transfer constitutes a breach of contract, the Court will consider whether:
1. Location is an essential term of the contract of employment;
2. The employee will be required to travel a longer distance to the new location, and whether the location is adequately serviced by public transport;
3. The standard of facilities offered at the new location are comparable to the old location;
4. The type of work which the employee will be required to perform at the new location is similar to that carried out at the old location;
5. The transfer will interfere with the employee’s family responsibilities;
6. The period of notice for the relocation given to the employee is reasonable.
In this case, the employer no longer required the work carried out by the employee at its Richmond site to be performed at all and requested that he relocate to its Laverton site, 28km away. The employee refused to transfer and sought a redundancy payment in accordance with his certified agreement in respect of his 16 years service.
His employment contract provided at clause 21:
“As part of the relocation to Laverton…it is agreed that all employees will receive a relocation payment of $650.00 (gross) payable in 2 equal instalments of $325.00… Further, in order to alleviate disruption to employees, the company will provide a commuter bus to travel from Richmond site to Laverton prior to the commencement of work and return after the completion of work. The company will use its best endeavour to ensure that adequate parking is available at Richmond.”
At the time the employee accepted the job, the Laverton site was not established. He had accepted the position at Richmond rather than any other location as it was nearer to where his dependent son and mother resided. Despite clause 21 of the contract, the Commission found that the contract did not permit a compulsory relocation and rejected the employer’s argument that it was an implied term on the basis of this clause.
The Commission accepted that it was unreasonable for the employer to require the employee to relocate, given the circumstances in which he accepted the position and his significant family responsibilities. It further held that even if there was an implied term permitting the employer to require reasonable relocation, it would be unlikely that the result would have been any different.
The degree of the relocation from Richmond to Laverton went to the root of the contract, constituting a repudiation which entitled the employee to terminate the contract and recover a redundancy payment. To avoid incurring liability for redundancy payments arising from compulsory transfers, franchisees should ensure that employment contracts (and workplace agreements) expressly allow for the transfer of employees between work sites. 04.06.2007
FCA Member
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