A RECENT decision by the full bench of the Federal Court has made it clear that businesses are responsible for the redundancies of workers in businesses they have sold unless they word employment contracts carefully.
The court dismissed Amcor Limited’s appeal against a decision in its Federal Court case against the Construction Forestry Mining and Energy Union. In that case the court found that Amcor had breached the relevant certified agreement by not paying severance pay.
Amcor had sold its paper mills in New South Wales, Queensland and Tasmania to its wholly owned subsidiary Paper Australia and then terminated the employment of the 800 employees who worked at the mills.
Paper Australia offered the employees work on the same terms and conditions as they enjoyed with Amcor with all benefits preserved.
Amcor employee’s terms and conditions were regulated by a Federal certified agreement between Amcor and the CFMEU.
That agreement provided for three weeks’ pay per year of service in the event that a position became redundant and an employee was retrenched. It did not include a clause to the effect that, if an employee was offered suitable alternative employment, he or she would not be entitled to severance pay.