Amcor Limited v Construction, Forestry, Mining and Energy Union

The High Court of Australia heard appeals from the Full Court of the Federal Court of Australia concerning the interpretation of the Australian Paper/Amcor Fibre Packaging Agreement 1997. The dispute arose after Amcor Limited sold its paper business to Paper Australia, and its employees were subsequently terminated by Amcor and immediately re-employed by Paper Australia on the same terms and conditions. The Construction, Forestry, Mining and Energy Union (CFMMEU) contended that the employees were entitled to severance payments under the agreement, arguing they had been retrenched. Amcor argued that the positions had not become redundant in the context of the agreement, and therefore no severance payments were due.

The central legal issue before the High Court was whether, in the circumstances of a corporate demerger and the transfer of a business, the employees of Amcor had been "retrenched" and their "positions" had become "redundant" within the meaning of clause 55.1.1 of the certified agreement, thereby entitling them to severance payments. This required the Court to determine the correct construction of the agreement, particularly the terms "retrenched" and "redundant position," and to consider whether the provisions of the Workplace Relations Act 1996 (Cth) regarding termination and succession were relevant to the interpretation of the agreement.

The High Court allowed the appeals, setting aside the orders of the Federal Court. The Court reasoned that while the employees' employment with Amcor was terminated, and they were immediately employed by a successor entity, the "positions" themselves did not become redundant. The Court held that the work being performed by the employees continued to be required by the company conducting the business in which those positions existed. Therefore, the condition for severance payments under clause 55.1.1, requiring a "redundant position," was not met. The Court concluded that the Federal Court's interpretation of the agreement was not the preferable one in the circumstances.