In FBIS International Protective Services (Aust )Pty Ltd v MUA and Fair Work Commission [2015] FCAFC 90 (26 June 2015), the Full Federal Court held that employer efforts falling short of procuring an offer of employment will not warrant a reduction in redundancy pay under the National Employment Standards (NES).

BACKGROUND

Following the loss of a long-standing contract to provide security services, FBIS International Protective Services (Aust) Pty Ltd (FBIS) attempted to secure employment for a number of its employees with the successful tenderer, Asciano Executive Services Pty Ltd (Asciano). FBIS provided employees’ contact details to Asciano, and had several discussions with the new operator regarding employees’ potential employment. Asciano then invited the employees to apply for positions and undertake an interview.

Asciano offered 49 of the FBIS employees employment (one in a lesser position), but did not recognise their service or accrued entitlements with FBIS. Four FBIS employees attended interviews with Asciano but were not offered employment.

LEGISLATION

FBIS applied to the Fair Work Commission (FWC) seeking a reduction of the redundancy pay payable under section 119 of the Fair Work Act 2009 (FW Act) to the 49 employees who secured employment with Asciano. FBIS argued that it had ‘obtained other acceptable employment’ for these employees under section 120 of the FW Act.

DECISION AT FIRST INSTANCE

Commissioner Gregory found that FBIS had “done enough in all the circumstances to ‘obtain’ alternative employment for the employees”.[1] He noted that ‘obtain’ cannot mean obtain in the fullest sense possible, “because one employer is incapable of effecting a contract of employment with its employees and another employer”.

The Commissioner further found that the employment of 48 of the employees with Asciano was “essentially the same” as their previous employment with FBIS, having regard to the nature of the work, remuneration, hours, workload, location, travel time and terms and conditions of employment. Accordingly, he reduced the redundancy pay payable to these employees to nil. He found that the final employee had been employed by Asciano on a substantially lower salary, and accordingly reduced her redundancy entitlement by 50%.

DECISION OF THE FWC FULL BENCH

Senior Deputy President Watson, Deputy President Gostencnik and Commissioner Cribb[2] upheld an appeal by the Maritime Union of Australia (MUA) and quashed Commissioner Gregory’s decision reducing the redundancy pay payable. The Full Bench found FBIS did no more than facilitate contact between Asciano and the employees. This led to an invitation for those employees to apply for a position and attend an interview, which may or may not have resulted in an offer of employment.

The Full Bench held that FBIS did not “obtain” employment for the employees, as demonstrated by the fact that:

  • four employees attended an interview but were not successful in obtaining positions with Asciano; and
  • FBIS had no knowledge of which employees had been offered employment with Asciano, or on what terms.

DECISION OF THE FULL FEDERAL COURT

Justices Jessup, Bromberg and Rangiah[3] unanimously dismissed FBIS’s application for judicial review of the FWC Full Bench’s decision.

Considering the origins and context of section 120 of the FW Act, the Full Court reasoned that “to obtain employment for an individual means to procure another employer to make an offer of employment, which the individual may or may not accept as a matter of his or her choice. If the employment is not accepted, the question whether that employment was ‘acceptable’ will then arise.”

The Full Court concluded that FBIS had merely facilitated the opportunity for the employees to apply for employment with Asciano, which is something less than obtaining an offer of employment which the employee could elect to accept or decline.

The Full Court disapproved of the previously applicable test which considered whether the employer was “a strong moving force towards the creation of the available opportunity”.[4] The Full Court found this to be a distraction which introduced unnecessary complications into the ordinary connotation of “obtain” – which is “to acquire, get”.

Finally, the Full Court rejected FBIS’s submission that, if the Court found it had not done enough to “obtain” employment for the employees, employers would have no recourse to section 120 of the FW Act in any “change of contractor” situation. The Court found that section 120 remained of practical utility in such a situation – FBIS’s application had merely failed on the facts due to the limited nature of what it had been able to obtain for its employees.

IMPLICATIONS FOR EMPLOYERS

The Full Federal Court decision in FBIS raises the bar with respect to what an employer must do to ’obtain’ other acceptable employment for its employees, if it seeks a reduction in redundancy payments payable under the NES.

Efforts that result in anything less than procurement of an offer of employment that an employee can either accept or reject, such as efforts that only facilitate contact between employees and a new employer and/or participation in a competitive recruitment process, will not be enough.

To enhance the prospects of succeeding in an application to avoid or reduce redundancy pay under section 120 of the FW Act, employers should ensure that they play an active role in the employment of outgoing employees with a new operator in a change of contractor situation.