The Australian Taxation Office (ATO) has backed away from a controversial attempt to curtail the redundancy entitlements of thousands of staff being cut from the agency, with the Community and Public Sector Union claiming victory for the rollback.

In a development likely to be seen as a precedent for other agencies trying to reduce costs by chopping staff, the union says it has settled the industrial dispute with the ATO over the potential reduction of time allocated for the redundancy process that had the potential to strip a month’s pay from staff that had put their hand up to leave.

Tax has revealed it will shed around 3000 positions to cut operating costs, one of the biggest redundancy hits for a single agency yet since the election of the Abbott government.

The CPSU lodged the dispute with Fair Work Commission after it claimed that the Tax Office was trying to shorten the length of time allocated for consultation over voluntary redundancies under the ATO Enterprise Agreement from four-and-a-half months to three-and-a-half months.

The union complained that the ATO’s interpretation of a six step redundancy process had sought to remove two initial steps if more than 15 employees were being counted as excess to requirements.

“If the ATO’s decision had stood, staff facing involuntary termination would have had the period to find another job before termination shortened to three and a half months,” said Alistair Waters, CPSU Deputy National President.

The CPSU says that while the ATO had recently indicated the agency might be able to largely avoid forced redundancies – due to the high number of volunteers   the union still clearly rejected the option of going to involuntary terminations or spill and fill processes.

Similarly, the union has put the ATO on notice that it isn’t about to let Tax staff be pushed into voluntarily leaving if they didn’t actually want to go.

“The CPSU has received a number of reports of staff feeling pressured to express interest in voluntary redundancy,” Mr Waters said, adding that the union had gone in to bat for “members in this situation” and that the “situation has been rectified.”

The focus is now turning to how work will be spread through the ATO after what the unions says will be “one in eight” staff headed for the door by October.

Among the concerns is that the level of departures will result in work being piled onto remaining staff “like the number of matters allocated to one person or turnaround times.”

Like the Department of Human Services, the ATO has over the past decade been looking to technology to help automate speed up and make processes in the massive agency far more efficient, with Treasurer Joe Hockey recently suggesting that core software systems at both Tax and DHS could need to be replaced at a cost of billions.

Tax is expected to shed more light on its efforts on the technology front on Tuesday when many of its most senior executives front the National Tax Practitioner Conference in Sydney.

Among those presenting whose views will be very keenly watched by both the technology industry and unions are Second Commissioner of Taxation, Geoff Leeper who is billed to talk on “the re-invention of the ATO in the context of the changing tax administration system” as well as providing an update on Tax’s online products.

Tax’s Assistant Commissioner, Enterprise Solutions and Technology, Chris Thorne, is also billed to talk on how “future technology will support a changing service offering from practitioners.”