March 2005

High Court decisions concerning redundancy (Amcor) and transmission of business (Gribbles)

On Wednesday 9 March the High Court handed down two long awaited decisions concerning redundancy and transmission of business. We're still assessing the decisions but, as always, the High Court's clarifications of the legal positions are of great benefit. To keep you up to date, here are brief summaries. Both of these cases will have significant impacts on the industrial landscape.

The Amcor decision - Amcor Limited v Construction, Forestry, Mining and Energy Union [2005] HCA 10

The High Court relieved Amcor of the obligation to pay redundancy to employees who had been moved from one employer to another within the Amcor group as part of a restructure. The employees were doing the same jobs with the same conditions, but the Federal Court had decided, and again on appeal, that the terms of the certified agreement were to be applied literally and that redundancy payments were due upon the loss of "a position with Amcor".

In the High Court's view industrial awards and agreements are not to be read so literally and have to be considered against their industrial background, the relevant legislation and the rough and tumble of industrial negotiations. Given that all the employees retained their position, although not with the original employer, they were not redundant within the meaning of the certified agreement and there was no entitlement to a severance payment.

The Amcor lesson:

This argument went all the way to the High Court because the disputing parties had different interpretations of the wording of the certified agreement. In the end the High Court cleared the air but a lot of lawyers were involved along the way. Perhaps the lesson is to make use of a few lawyers up front to avoid the need to use more of them down the track.

The Gribbles decision - Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd [2005] HCA 9

The High Court decided that Gribbles, a provider of radiology services, was not, in the terms of the legislation, the successor to the business of MDIG and was not therefore bound by the Federal award that had applied to MDIG. Gribbles had become the new licensee to Region Dell in place of MDIG. There were no dealings between Gribbles and MDIG nor any transfer of business, although Gribbles offered employment to those who had worked for MDIG.

In explaining its decision the High Court told a story of a business who sold a car, one of its assets. The buyer would not become a successor to the business merely because it had purchased the car. And even if the buyer used the car for the same purpose and offered work to the employees of the business, those facts on their own would not be enough to say that the buyer was a successor and thereby become covered by the Federal award.

The Gribbles lesson:

Just because a new employer performs the same activities as a previous company covered by a Federal award it does not follow that it is the successor to the business and bound by that Federal award. It's all about analysing the "work in a business" rather than just the "work".

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