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Full Bench rules on redundancy definition

A FULL Bench of the Fair Work Commission has ruled that ‘ordinary and customary turnover of labour’ under the Fair Work Act 2009 was of no consequence to redundancy payouts as defined under a workplace agreement for a major facilities management firm.

Collectively represented by the CFMEU, the CEPU and the AMWU, a group of 78 employees sought payment of redundancy entitlements after Spotless Facility Services failed to secure a new contract with the Australian Defence Force, resulting in the employees’ dismissal.

Spotless contested the claim, arguing that the Agreement took its definition of redundancy from s.119 of the Fair Work Act 2009, indicating the employees’ dismissal was due to ‘ordinary and customary turnover of labour’, in relation to the expired contract.

However, the trio of trade unions argued the employees had been made redundant under the Spotless National Maintenance Enterprise Agreement 2014 and were therefore entitled to redundancy entitlements outlined in the agreement.

Specifically, the trade unions said the Agreement made no mention of ‘ordinary and customary turnover of labour’, inferring that the definition of redundancy in the Agreement operated independently of redundancy described in Fair Work Act 2009.

President Iain Ross, Deputy President Gostencnik and Commissioner Blair, who comprised the Full Bench of the Fair Work Commission, agreed with the trade unions’ argument, stating that the Fair Work Act did not intend to limit redundancy entitlements defined in a workplace agreement.

“The [Fair Work Act] does no more than scope out the class of persons to whom redundancy pay under the National Employment Scheme (NES) must be made,” the Full Bench said.

“Section 119(1) [of the Fair Work Act] does not define ‘redundancy’, rather it sets out the limited circumstances in which an employee becomes entitled to redundancy pay under the NES.

“The Agreement also does not set out a definition of ‘redundancy’ but rather sets out the levels of severance entitlement to which an employee becomes entitled if that employee’s employment is terminated by reason of redundancy.

“We therefore see no persuasive reason to reading down the phrase ‘whose employment is terminated by reason of redundancy’ in the Agreement by limiting the entitlement only to the class of persons entitled to redundancy pay found in s.119(1)(a).

“As we have already indicated It does not define ‘redundancy’ and is therefore of little assistance in identifying a person ‘whose employment is terminated by reason of redundancy’ within the meaning of the Agreement.”

The Full Bench ruled in favour of the employees, permitting the group to proceed with claims seeking redundancy payments.

Click here to read the decision in full.

Implications for Employers

This case is significant for resource industry employers as it demonstrates how the Fair Work Commission may approach ambiguity in workplace agreements by applying or departing from the standards otherwise set under the Fair Work Act 2009.

Further, it reflects the importance of ensuring terms in workplace agreements are clearly defined to avoid variant interpretations between resource industry employers and their workforces.

AREEA’s workplace relations consultants can provide advice, information and guidance to ensure your workplace agreement is watertight. Contact your local AREEA office to speak to one of our experts for more information.

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