What’s it all about?
In an important decision by the Federal Court, the long standing exception to redundancy entitlements based on the “ordinary and customary turnover of labour” has come under the spotlight and will no doubt be the new benchmark relied upon by employee organisations to demand redundancy when service contracts aren’t renewed and where a large number of employees are consequently dismissed.
Whilst the decision, in my view, went against the employer largely because of the way the evidence was focused and adduced in that case (or lack thereof), it serves as a “wake up call” for large service contract businesses (such as those in cleaning, security and catering industries) to ensure they have the evidentiary basis and protections to argue the exception and not just assume it will fall in their favour because of the traditional nature of their business or industry.
This decision is a handy reminder to re examine, and, where necessary, strengthen your business processes to assist in having the evidentiary basis to rely on the exception. This could include things like representing clearly to prospective employees (when in jobs interviews) the nature and type of industry they are entering and how that impacts on their possible future entitlements; ensuring contracts of employment, policies and any enterprise agreements are properly drafted to clearly express the exception and understanding of it; where practicable and feasible, consider the structure of the Company Group so as to avoid employees sitting in one employer member of the Group long term and despite contracts being won and lost by the Group; and (where not otherwise obligated by an industrial instrument) where reasonable, consider keeping affected staff “in the loop” on approaching end dates to contracts, and on re tendering processes, and again reminding affected staff of the possible consequences of no renewal or loss of a contract.
In my view, this decision does not mean the weakening of the exception, it’s just a reminder that each case will turn on its own facts (as usual) and on the evidence, and to be “on your toes”, look at your structures and business practices and don’t assume the nature of your business and industry you are in will automatically be enough to fit within the exception.