Earlier this year, we prepared an article on what employers have to do to claim the redundancy pay exemption under the Fair Work Act 2009 (Cth) (FW Act). Under section 120 of the FW Act, the Fair Work Commission (FWC) can reduce or eliminate the redundancy pay obligations of an employer if it is satisfied that the employer has obtained "other acceptable employment" for a redundant employee.

One of the cases that we looked at was that of Maritime Union of Australia v FBIS International Protective Services (Aust) Pty Ltd [2014] FWCFB 6737 (21 October 2014) (FBIS case) in which the FWC found that FBIS International Protective Services (Aust) Pty Ltd (FBIS) had not done enough to "obtain" other acceptable employment for 49 of its security industry workers. It was therefore liable for redundancy pay, having failed to meet the requirements of section 120 of the FW Act.

FBIS appealed the decision to the Federal Court of Australia on the grounds that the Full Bench of the FWC had erred in the meaning it gave to the word "obtains".

Background

The background is that in October 2012, FBIS lost its contract to supply security services to Asciano National Executive Services Pty Ltd (Asciano) and was replaced by the incoming contractor ACG Pty Ltd (ACG). ACG subsequently employed 49 of FBIS' employees (Employees) to deliver the same security services to Asciano.

FBIS applied to the FWC for an exemption from making redundancy payments to the Employees under section 120 of the FW Act, on the grounds that it had sourced other employment for the workers with ACG. The Full Bench of the FWC found that FBIS had not obtained acceptable alternative employment for the workers for the reasons set out in our previous article.

Decision of the Federal Court

In a departure from previous case law, the Full Court of the Federal Court found it unnecessary to consider whether FBIS had been a "strong moving force towards the creation of the available opportunity" with ACG. Rather, the Federal Court held that the general connotation of the word "obtain" was sufficient, that being "to acquire, get", and should not be regarded as a "perfect fit" when deciding whether an employer has satisfied the requirements of section 120.

Nevertheless, the Federal Court dismissed FBIS' appeal on the grounds that FBIS did not do enough to obtain other acceptable employment for the Employees. The Federal Court confirmed the Full Bench of the FWC's decision that FBIS had merely facilitated the opportunity for the Employees to apply for employment with ACG. It did not do enough to advance the prospects of the Employees to gain employment with ACG, having "obtained for them...something less than offers of employment which they could accept or decline as a matter of choice."

The Federal Court held that the bar set by section 120 was not too high for the section to have practical utility, notwithstanding that FBIS had been unsuccessful in obtaining the exemption.

Lesson for employers

Whilst an employer does not necessarily have to be a "strong moving force" behind the creation of an alternative opportunity, the employer must still do more than facilitating an opportunity to enter the recruitment process for that opportunity. There are a number of steps that an employer can take in order to meet the requirements of section 120 of the FW Act, which are set out in our previous article.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.