The federal court has dismissed a long-running claim for $30 million in redundancy entitlements by former IT staff of the Commonwealth Bank whose jobs were outsourced to EDS.
To close a five year legal dispute, Justice Michael Moore dismissed an application from the Financial Sector Union (FSU), which sought a declaration that the bank had breached its industrial award by not agreeing to pay severance payments when it outsourced its entire IS department -- consisting of approximately 1,400 IT staff -- to EDS in 1997.
FSU, representing former Commonwealth bank IT staff, alleged the employees were entitled to severance pay because their employment with the bank had been effectively terminated regardless of taking positions with EDS.
When the bank transferred its IT staff to EDS, some employees took the redundancy package while others signed a letter saying they were resigning from the CBA to join EDS. FSU claimed that the uptake of new employment contracts by the former staff did not call for a continuation of their previous employment with the bank.
However, the Federal Court decided the Bank's transfer of IT staff to EDS did not render those employees redundant, therefore the bank is not liable for severance payments.
"I do not see how I can reason ... that even though the Bank employees who remained in the employment of the Bank had not been in a redundancy situation on or immediately before 10 October 1997. Bank employees who did not remain in the employment of the Bank (because they resigned) had been in a redundancy situation on or immediately before 10 October 1997. Each group was in the same situation, but responded differently," Justice Moore said, when announcing the decision, according to a transcript of Court proceedings.
The Commonwealth Bank said, in a statement: "Most employees chose to resign and accept employment with EDS. The FSU subsequently sued the Bank for redundancy pay for those employees who voluntarily left and joined EDS."
"Staff who chose to resign from the Bank and move to EDS in 1997 were in no way disadvantaged. They retained terms and conditions that were equal to or better than the terms and conditions of employment with the Bank on an overall basis, including the Bank's redundancy arrangements. As well, they received a special payment from EDS."
The Bank said the Court's decision vindicates the Banks position that redundancy monies should not be paid to employees that have ongoing employment.
A spokesperson from FSU declined to comment on the Courts' decision without legal counsel. The FSU is seeking legal advice on the ruling.