The Federal Court has dismissed a class action of senior public servants suing their former employer for unpaid redundancy payments.
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A lawsuit once billed as threatening Commonwealth-owned corporation Airservices Australia with millions of dollars in payments to current and ex-employees foundered on Friday as the court rejected the claim.
Judge Robert Bromwich ruled that workplace deals with more generous redundancy entitlements did not cover the public servants, because they had accepted individual contracts.
The decision denies the former staff at the agency additional severance pay and saves the Commonwealth a hefty bill in payments to other bureaucrats on contracts.
Airservices Australia is the government entity responsible for air traffic control, firefighting and navigation services at a number of federally leased airports across the country.
The class action's lead applicant, former Airservices strategic support manager Catherine Duck, argued the corporation owed her entitlements under its enterprise agreement, including a larger redundancy payout.
Ms Duck, who accepted an individual contract in 2010, took a redundancy package about six years later. This included a severance payment capped at six months' pay and ignoring her previous employment in the Australian Federal Police.
She would have received 44.5 weeks' pay under Airservices' workplace deal, which would have forced the corporation to calculate the payment based on her entire 13 years' work for federal employers.
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Airservices argued the enterprise agreements in 2009 and 2013, covering staff while Ms Duck worked at the corporation, stated they did not cover employees on individual contracts.
Ms Duck told the court her role was covered under the workplace deals, which couldn't be replaced with contracts for staff unless they were employed under older agreements.
She also argued industrial laws made it unlawful for a workplace deal to let staff opt out.
Justice Bromwich disagreed, finding the 2009 and 2013 enterprise agreements did not cover Ms Duck.
"Both of those agreements expressly contemplate that such contracts may be entered into, and both provide that an employee who enters into such a contract is not covered by the respective agreement," he said.
Ms Duck's promotion in 2010, when she accepted an individual contract, involved a change in her employment, Justice Bromwich said.
"She knew before accepting the position that the promotion she was being offered resulted in no longer being covered by the relevant enterprise agreement."
Justice Bromwich said a "significant amount of money" was at stake in the case, if replicated by similar claims from all group members.
The corporation has two weeks to apply for payment covering its legal costs.