Federal Court finds construction workers not eligible for redundancy pay

In a recent decision, the Full Federal Court affirmed a primary judge’s finding that three applicants employed on a construction project were subject to an exception to redundancy pay under the Fair Work Act 2009 s 119.

In mid-2017, the respondent was engaged to provide maintenance services for a construction project in the Pilbara region of Western Australia. The construction phase of the project was scheduled to conclude in June 2017 but was later extended.

In August 2018, the construction project notified the respondent that it would no longer require the respondent's staff at the construction site after 30 September. The respondent subsequently notified the three applicants that the project would soon end and stated that it would attempt to secure alternative employment for the applicants. However, unable to do so, the respondent terminated the applicants’ employment on 30 September. The applicants received no redundancy pay.

Two of the applicants stated that they were not aware that their employment would cease upon completing the construction project. Further, each applicant stated that they expected to either be redeployed or receive a redundancy payment.

The primary judge found that the nature of the applicants’ work on the construction project was finite. He further held that given the applicants had an expectation that they would either be redeployed or compensated by way of redundancy payment, it could not be said that they also had a reasonable expectation of ongoing employment.

Moreover, the primary judge also found that the applicants’ terminations fit within the “ordinary and customary turnover” definition under s 119, which provides an exception to an employee’s entitlement to redundancy pay.

“The terminations came about because, in the business in which the [r]espondent operated, work is undertaken by the [r]espondent in accordance with contracts that are limited and finite,” the primary judge explained.

On appeal, the applicants submitted that the primary judge had erred by considering the exception with reference to the applicants’ work at the construction project rather than their ongoing employment with the respondent. However, the Full Court agreed with the primary judge’s findings and found that the respondent’s enterprise agreement plainly provided that the termination of employment due to the end of a contract is part of the “ordinary and customary turnover of labour” within the company.

Given this, the Full Court dismissed the appeal.

Key Takeaways:

• Generally, an employee is entitled to redundancy pay where they are made redundant by their employer
• However, s 119 provides that this is not necessary where the redundancy is “due to the ordinary and customary turnover of labour”
• Where relevant, this exception should be made clear to an employee from the outset of their employment