Redundancy Payments and Alternative Employment

An employer, who lost a large contract to supply security services, has recently been ordered to make redundancy payments to 49 affected employees.

The employer, FBIS International Protective Services (Aust) Pty Ltd, had previously applied to and was granted an exemption by the Fair Work Commission (FWC) from having to make redundancy payments. The exemption was granted, at first instance, on the basis that the majority of these employees were taken on by AGC National Pty Ltd who ended up with the contract for security services.

The decision was successfully appealed and the full bench of the FWC ruled that FBIS were not in fact the motivating factor for organising acceptable alternative employment for the employees. FBIS’s involvement in obtaining other employment for the employees was limited to providing the employee’s names and contact details to AGC. Although most of the employees were subsequently employed by AGC, the actions of FBIS were not found to be sufficient for the purposes of securing alternative employment for the employees.

Lesson for Employers

Employers who are obliged to make redundancy payments can make an application under the Fair Work Act to have this obligation waived if they have found acceptable alternative employment for the individuals concerned.  

This decision highlights that the employer needs to actively and constructively take steps to secure the alternative role for the employee if they are seeking to have their obligation to make redundancy payments waived. This case demonstrated that the mere suggestion by an employer that employees are able to apply for other positions and the provision of contact details, in the absence of further involvement, is unlikely to be deemed sufficient.

Maritime Union of Australia v FBIS International Protective Services (Aust) Pty Ltd [2014] FWCFB 6737.

Sarah Waterhouse – Solicitor – BlandsLaw 

Andrew Bland – Solicitor – BlandsLaw




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