The federal court has thrown out a long-running claim for $30 million in redundancy entitlements by former IT staff of the Commonwealth Bank whose jobs were transferred over to EDS when the bank outsourced all its IT services in 1997.
Represented by the Financial Sector Union (FSU), the employees claimed they were entitled to severance pay because their employment with the bank had been effectively terminated despite taking positions with EDS. The union argued that the uptake of new employment contracts by the former staff did not in itself necessitate a continuation of their previous employment with the bank, despite some previous entitlements and conditions being kept in place by EDS.
The case ran for more than five years and the decision sets a significant precedent for contingent liability of organisations that offer staff the option to transfer their jobs to a new employer.
Union sources had previously told Computerworld that should the case go in the favour of the employees; they estimated that the $30 million claimed could have ballooned to as much as $250 million, when interest, accruals and inflation were taken into account.
A spokesman for the Commonwealth Bank said that the decision was a vindication of the bank's position, but declined to estimate how much the case had cost to defend.
With the FSU yet to decide whether it will appeal the matter in the High Court, the Commonwealth Bank spokesman said the bank would "fight the matter to the end".
"Nobody should be able to double dip on entitlements. If someone chooses to resign they should not be able to come back later and say that they should have been made redundant," the spokesman said.