Federal Court dismisses payout-hopping company’s application for relief

A recent decision in the Federal Court has clarified that a redundancy does not require a management-initiated decision to be characterised as such, or extinguish payout obligations.

Justice Samuel Vandongen of the Federal Court has dismissed service provider Serco Australia’s application for legal declarations absolving it of redundancy entitlement payments to employees who signed with the new owners of an immigration detention centre after the company failed to retain its contract.

The company sought legal directions pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) and/ or ss 562 and 564 of the Fair Work Act 2009 (Cth) on the basis that the loss of 146 immigration staff was not a redundancy event, but an exodus to a new employer.

The contract with the Department of Home Affairs regarding the ownership of the West Australian detention centres transitioned to Secure Journeys on 13 March 2025, with 146 existing workers finding employment with the new owners.

However, the workers did not adequately communicate the transition to Serco, but chose to limit communication and simply walk out the door on their last rostered shift.

According to clauses 25 and 26 of the Serco Immigration Services Enterprise Agreement 2023, “redundancy occurs when Serco decides that it no longer requires the job the Employee has been doing to be done by anyone and that is not due to the ordinary and customary Employee turnover”.

It further noted that a position may be made redundant for operational reasons, when a role is not required due to technology changes, and if it is transferred to a different location not within a reasonable travelling distance for the employee.

Redundancy pay would not be entitled if an employee resigned prior to receiving redundancy notice, is a casual worker, is offered but declines alternative employment within the company, or accepts alternative employment from Serco.

According to the applicant, this transition without unemployment or financial disruption and without notice constituted a resignation – which would mean the company did not owe redundancy payment.

However, Justice Vandongen found that redundancy did occur under cl. 25.1 of the agreement because “by no later than the Transition Date, Serco finally decided that it no longer required the jobs the Employees had been doing to be done by anyone”.

His Honour noted that, during the period that Serco was required to continue services at the centres, it had not decided that it would not require the jobs – but that it would no longer require the jobs when operation was handed over to Secure Journeys.

With the jobs ceasing to exist the moment the contract ended and the completion of shifts up until this time also not constituting a resignation, Justice Vandongen found that the employees were made redundant and not self-terminated.

Justice Vandongen said: “The fact that Serco was forced to make this decision because its contract to provide immigration detention services to the Department has not been renewed does not alter the fact that such a decision was made.”

“The approach taken by Serco demonstrates that it misunderstood when redundancy occurred under the Enterprise Agreement.”

Having rejected Serco’s contention that the employees terminated their employment before or on the transition date and finding redundancy occurred, Justice Vandongen refused to grant the declaratory relief sought by Serco.

Citation: Serco Australia Pty Ltd v United Workers Union [2026] FCA 1648

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