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  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".
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
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
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
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