Berkeley Challenge Pty Ltd v the Respondent
What happened
The Spotless group companies (Berkeley Challenge and Spotless Services Australia) terminated several long-serving employees after losing contracts to supply services to their customers. The terminated employees had worked for the companies for many years in secure, ongoing roles. The companies argued their terminations fell within the 'ordinary and customary turnover of labour' exception to redundancy pay obligations under s 119(1)(a) of the Fair Work Act.
What was decided
The Full Bench dismissed the appeals by Berkeley and Spotless Services. The Court found that the employees had a settled expectation of continued employment based on the length and nature of their employment relationships. The companies failed to prove the terminations were due to ordinary and customary turnover. The Court held that the exception only applies to employment relationships where terminations are expected and normal, not to long-term career employment.
What it means for employers
Employers cannot avoid redundancy pay obligations by claiming ordinary turnover when they terminate long-serving employees. The company's membership of a larger group does not determine whether its own terminations fall within the exception. Courts assess the employment relationship's character and the employee's reasonable expectations of continued employment.
What it means for employees
Long-serving employees with settled expectations of ongoing work are entitled to redundancy pay if dismissed due to loss of work. The exception for ordinary turnover does not apply to career employees whose employment was not characterised by regular terminations.
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