Australian Taxation Office unions have given up their legal battle against an industrial tribunal decision they say threatens the job security of the ATO's 25,000 public servants.
But one of the unions says it will continue to fight against a ''spill and fill'' approach to workers deemed excess to requirements.
The two unions, the Australian Services Union (ASU) and the Community and Public Sector Union (CPSU), lost two cases in the industrial tribunal against a move by tax bosses to force eight junior employees in Melbourne to reapply for just four positions, with no guarantee of jobs for the losers in the process.
The ASU, backed by the CPSU, argue that the decision by Fair Work Australia set a precedent that the Tax Office could use to cull its workforce while dodging the requirements of its collective agreement.
But union members have been told that the ASU's senior barrister has advised that further appeal would have little hope of success.
ASU Tax Officers' branch secretary Jeff Lapidos told his members of the legal advice but said he was hopeful that the Fair Work's decision could not be used again and again to dispose of public servants deemed excess to requirement.
''The ASU leadership has been particularly concerned about the ATO following a similar approach in future,'' Mr Lapidos told his members.
''The ATO could decide to reduce team sizes in particular areas or even across the board; and conduct reverse orders of merit to decide who will stay on the team and who will be subject to the redeployment and redundancy provisions.
''Our barristers advised that the decision of the Full Bench of the Fair Work Commission is not a precedent which can be relied upon by the ATO if it tries this approach elsewhere.''
The Tax Office says four of the eight facilities management workers are now ''excess'' as management moves 2500 Melbourne CBD-based bureaucrats from five locations into the city's massive Collins Square development.
The eight staff members were encouraged to apply for the reduced number of jobs or to consider voluntary redundancy.
The union took its fight against this to the Fair Work Commission, arguing the move was in breach of the Tax Office's obligation to find alternative work and retraining for staff deemed to be excess to requirements.
But commission vice-president Michael Lawler found in April that the Tax Office's approach was a ''practical, sensible and fair'' response to a ''classic redundancy situation'' where the eight Melbourne staff did not have technical taxation skills needed if they were to be moved around the organisation.
Following Mr Lawler's judgment, the two unions joined forces, with the CPSU worried the decision could have repercussions right across the public service, and appealed to the full bench of the Fair Work Commission.
But the full bench dismissed the appeal, finding that the Tax Office was entitled to offer redundancies to workers deemed to be excess and to do all it could to retain the best people for the available jobs.