FBIS International Protective Services (Aust) Pty Ltd v Maritime Union of Australia [2015] FCAFC 90

 

This full bench of FWC decision relates to whether the applicant had obtained other acceptable employment for employees whom it had retrenched in consequence of the loss of a contract.

 

The FW Act exempts employers from paying redundancy pay where it “obtains other acceptable employment for the employee”. This matter focuses on the word “obtains”.

 

As is all too familiar in our current working environment – contracts for services are tendered out by companies and are won or lost by way of a tender box. In most cases, the outcome has a direct bearing on employees.

 

The FB held that in this matter, that the applicant had not done enough to “obtain” employment for its workforce, despite:

 

  • 49 employees were offered, and accepted, employment with the new contractor.
  • 48 of them, their employment with the new contractor was in the same position, and on the same terms and conditions, as before. One was offered, and accepted, employment in a lesser position.
  • Four did not receive employment.
  • In all cases, the new contractor did not recognise the employees’ previous service.

 

And, the applicant having a number of steps to secure employment with the new contractor, including:

 

  • Having discussions with representatives of the new contractor.
  • Providing the new contractor with the contact details of the employees.
  • Providing the new contractor with information about the arrangements within the enterprise agreement.
  • Advising that it had paid the employees their wages and all accrued leave entitlements up to the end of its contract.

 

However, the FB found that the applicant it played no role other than the provision of contact details to the new contractor; adding that the only other actions taken by the applicant were its unsuccessful attempts to engage the new contractor in discussions directed to a commercial agreement between the two companies in relation to the employees’ accrued leave and accrued service with the applicant, and the provision of a copy of the enterprise agreement, which the new contractor already had from another source.

 

The FB also considered the history of redundancy from the precedent setting Termination, Change and Redundancy Case (1984) 8 IR 34 noting:

 

“We do not wish to prevent an employer making an application to be exempted from the general prescription pursuant to this decision in cases where an employer obtains acceptable alternative employment for an employee but we would point out that, in our decision, severance payments are not made for the purpose of assisting employees to find alternative employment.  Where such an application was made it would be important to consider whether previous service with the previous employer was recognised as service with the new employer (my emphasis). However, we would make it clear that we do not envisage severance payments being made in cases of succession, assignment or transmission of a business.”

 

A provision in terms similar to those referred to above came before a Full Bench of the Industrial Relations Commission in Re Clothing Trades Award 1982(1) (1990) 140 IR 123.

 

Viewed in this way it will be seen that the intention is not to impose an absolute test on the employer’s ability to “obtain” alternative employment but rather it refers to action which causes acceptable alternative employment to become available to the redundant employee.  The employer must be a strong, moving force towards the creation of the available opportunity. 

 

By way of commentary, for the applicant to have been successful in this matter, it would have had to:

 

  • “Hand deliver” the new employment to its employees to a solid offer on the same or similar terms as the employee enjoyed prior to the change.
  • The new employer recognising the employee’s service with the previous employer.

Greg Reiffel Industrial Relations & Human Resources Consulting has been providing the following services to businesses for over 30 years:

 

  • General HR and IR advisory service.
  • Fair Work Commission representation (eg unfair dismissals, adverse actions, etc.).
  • Workplace investigations and mediations.
  • Policies and procedures.
  • Discipline & Termination.
  • People Audits (are you at risk of prosecution?).
  • Enterprise Agreements, Contracts of Employment, Individual Flexibility Agreements.
  • On-site HR services.

Contact Greg on 0438 906 050 or mailto: greg@gregreiffelconsulting.com.au.