The aged care contract ended, but the redundancy pay was still owed

From December 2001, Compass group companies, known together as Medirest, supplied catering, cleaning and laundry services to Eldercare's aged care homes in South Australia. As the contracts were renewed, many workers stayed for years. Kerry Aylett, for example, started as a catering assistant at Eldercare's Cottage Grove home in 2005, moved across to Compass in 2008, and did the same job until 30 June 2018.

In September 2017 Eldercare and Medirest announced that Eldercare would bring the services in-house and the partnership would end on 30 June 2018. In April 2018, 31 employees were given notice. Medirest did not pay them redundancy pay. It relied on an exception in s 119 of the Fair Work Act: no redundancy pay is due where a job ends because of "the ordinary and customary turnover of labour". Its contracts said continuous employment could not be guaranteed.

The United Workers Union took the case to the South Australian Employment Tribunal, which sided with Medirest. On appeal, the Full Court of the Federal Court disagreed. The test, it said, is whether a reasonable person in both parties' shoes would have understood the job would end within a reasonably foreseeable time. These were jobs that an aged care home would need done for as long as it operated. Before the September 2017 announcement the workers had never been told how long the client contracts ran, and 16 of the 31 had 10 years' service. An employer cannot make losing a contract "ordinary" turnover just by how it runs its own business, or contract its way out of the National Employment Standards.

The Full Court held that Medirest had to pay redundancy pay to those of the 31 who had at least a year's continuous service and were not casuals. It sent the question of penalties back to the Tribunal.