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Employment Law - Redundancy - Transmission of Business

Date: July 04, 2009

Authors: LAC Lawyers

Your employer writes to you informing you that the company has sold its business together with its assets to another entity and that you are to re-apply for the same position in the new company. What are your rights? Have you been terminated? Are you entitled to claim redundancy payments?

The position of an employee on transmission of a business was unclear until the decision handed down in the case of Amcor Limited v CFMEU and Ors.
 
In the said case, AMCOR decided to restructure its operations and as part of its restructuring exercise, the employees of AMCOR were terminated and offered equivalent position with Paper Australia Pty Ltd, a wholly owned subsidiary of AMCOR. Other than the change of name of the employer, the terms and conditions of the employment remained the same. CFMEU representing the employees, commenced proceedings in the Federal Court on the grounds that following the termination of the employment with AMCOR, redundancy payment should be paid to the employees pursuant to the Certified Agreement.
 
The Federal Court agreed with the argument of CFMEU in interpreting the terms of the CA and held that the employees were entitled to redundancy payments as the employees were made redundant pursuant to the transmission of the business from AMCOR to Paper Australia Pty Ltd. AMCOR being dissatisfied with the decision of the Federal Court, appealed to the High Court and on appeal, the High Court allowed the appeal of AMCOR and rejected the view of CFMEU that the transfer of AMCOR employees to Paper Australia Pty Ltd had triggered redundancy payments under the CA.
 
The High Court focused on the word ‘position’ in the CA and related it to being position in business rather than position with AMCOR. Therefore the paramount consideration was whether the position had become redundant rather than whether the employee had become redundant.
 
Consequently, the High Court held that the employees’ position did not become redundant as the employees had been offered identical position with Paper Australia Pty Ltd. Therefore it did not trigger any redundancy payments as envisaged by CFMEU.
 
Conclusion
 
A cursory reading of the judgment would lend support to the proposition that a transmission of a business where employees are transferred from one employer to another in the same group will not trigger an automatic entitlement to a redundancy payment. Ultimately, the entitlement of a redundancy payment during transfer of employees on transmission of a business is dependant on the terms and interpretation of the agreement or award of the employment. In circumstances where there is a change in the terms of employment of the employee, there may be an automatic entitlement to redundancy payment on transmission of a business. In addition, the decision of AMCOR was limited to the facts and circumstances of the matter and therefore the Court may proceed on a different basis when presented with a different set of facts and circumstances.   Where you are concerned about any aspect of redundancy call LAC Lawyers now on (02) 9904 6800 for an appointment for proper professional advice and assistance.
 

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