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Perspective

Previous employment with associated entities is not recognised in redundancy payouts

Section 22(5) of the FW Act provides where there is a transfer of employment to an associated entity, any period of service with the first employer counts as service with the second employer. The period between the two employers will not break the continuity of service, but will not count towards the length of service. However, this only applies to transfers of employment which took place on or after 1 January 2010 (when the FW Act came into operation).

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Under section 22 of the Fair Work Act 2009 (Cth) (FW Act), a period of service is a period during which the employee was employed by the employer excluding the following:

  1. Any period of unauthorised absence
  2. Any period of unpaid leave (except community service leave) or unpaid authorised absence
  3. A period of stand down under Part 3-5 of the FW Act or an applicable enterprise agreement
  4. A period of leave or absence of a kind prescribed by the Fair Work Regulations 2009 (Cth).

The above exclusions do not break an employee’s continuity of service – they simply do not count towards the length of their service.

In the case of Flight Attendants’ Association of Australia v Qantas Airways Limited; Qantas Domestic Pty Ltd [2020] FWC 6392, the Fair Work Commission (FWC) confirmed periods of service with associated entities, prior to 1 January 2010, are not to be taken into account for the purposes of calculating redundancy payouts.

Qantas Group acquired Southern Australian Airlines in 2002. Prior to this, Southern Australian Airlines was known as Sunstate Airlines and Murray Airlines (associated entities). Many flight attendants were brought over following the acquisitions.

In light of the impact COVID-19 had on business, Qantas, in accordance with the redundancy provisions of their enterprise agreements, called for expressions of interest for redundancies from flight attendants. Some of those who volunteered were under the impression they would receive a redundancy payout based on their long-standing service with the associated entities.

In reaching its decision, the FWC noted the redundancy provisions of the applicable enterprise agreements only referred to service with Qantas specifically, and there were no other named entities throughout the agreement.

Lessons for employers

  1. When construing the words in an enterprise agreement, you cannot rely on the definition of the same words or phrases found in other statutory schemes with different purposes and contexts. In this case, there was no need to look beyond the words used in the enterprise agreement as the service which counted was with Qantas specifically. If there was ambiguity, the provisions of the FW Act would be the next point of call.
  2. Casual employees do not receive redundancy entitlements as their employment is not usually considered as continuous employment. The Flight Attendants’ Association of Australia unsuccessfully tried to rely on the provisions of the FW Act which provides protection for casual employees who have been engaged on a regular and systematic basis for more than 12 months against unfair dismissal, to put an argument that these casual employees should also be entitled to redundancy on a pro-rata basis.

Written by Nes Demir

Have a question or need advice?

Our team are here to provide the right advice for your business and workforce. If you have a question or require assistance, please contact Kim McLagan.

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