1
Fair Work Act 2009
s.394—Unfair dismissal
Nicole Burdziejko
v
ERGT Australia Pty Ltd
(U2015/139)
DEPUTY PRESIDENT GOOLEY MELBOURNE, 1 APRIL 2015
Application for relief from unfair dismissal.
[1] Ms Nicole Burdziejko alleged the termination of her employment by ERGT Australia
Pty Ltd was unfair. In her application she advised that she commenced employment on 10
June 2014 and his employment ended on 19 December 2014.
[2] In her application Ms Burdziejko advised that she had initially been employed by
Hays to work at ERGT and after three months she was offered ongoing employment by
ERGT which she accepted. She stated there had been a transfer of business from Hays to
ERGT and ERGT did not advise her before she commenced employment that it would not
recognise her service with Hays.
[3] ERGT filed an employer response to the application and objected to Ms Burdziejko’s
employment because she had not served the minimum employment period. ERGT stated that
Ms Burdziejko commenced employment on 3 September 2014. It denied there had been a
transfer of business.
[4] ERGT advised that it would not participate in conciliation until its objection was
determined.
[5] On 28 February 2015, ERGT provided a copy of the letter from Hays which advised
that Ms Burdziejko would be assigned to ERGT from 3 June 2014. It also provided an
employment summary for Ms Burdziejko dated 3 September 2014.
[6] Ms Burdziejko contends that there was a transfer of business from Hays to ERGT. She
submitted that she had been employed by ERGT within three months of the termination of her
employment with Hays. She further submitted that the work she performed for ERGT is the
same as that performed for her for Hays. She further submitted that as a result of a labour hire
agreement between Hays and ERGT her role had been outsourced to Hays in 2014. That
outsourcing ended on 2 September 2014 when ERGT brought the work back in house. She
submitted that she was a transferring employee. She further submitted that as ERGT did not
provide her with written advice prior to her employment that her service would not count, her
service with Hays counts towards her service with ERGT.
[2015] FWC 2308
DECISION
AUSTRALIA FairWork Commission
[2015] FWC 2308
2
[7] ERGT accepted that it contracted Hays to provide labour. It submitted that ERGT and
Hays are not associated entities. It submitted that it did not outsource work to Hays and it did
not therefore cease to outsource any of its work to Hays.
[8] ERGT accepted that Ms Burdziejko performed the same work for ERGT as she did for
Hays.
[9] ERGT submitted that there was no evidence that Ms Burdziejko’s casual employment
with Hays was terminated.
[10] ERGT submitted that there was no transfer of business because there is no relevant
connection between Hays and ERGT.
[11] It submitted that there is no evidence to support a finding that her work with Hays was
a result of an outsourcing arrangement with ERGT and that her subsequent employment with
ERGT arose because that outsourcing arrangement ended. It submitted that there is no
evidence that Hays undertook any part of ERGT’s business or that ERGT terminated that
arrangement. It was submitted that Hays did no more than contract with ERGT to provide
labour.
[12] A conference was held on 25 March 2015. At that hearing I granted permission for
ERGT to be represented by a lawyer as I considered that given the complexity of the issues
raised it would enable the matter to be dealt with more efficiently.
Does Burdziejko’s service with Hays count as service with ERGT?
[13] The starting point for determining this is s.22 of the Fair Work Act 2009 which defines
a period of service with a national system employer.
[14] S.22(5) provides that if there is a transfer of employment, the period of service with
the first employer counts as service with the second employer.
[15] S.22(7) provides that there is a transfer of employment for non associated entities if
the employee is a transferring employee in relation to a transfer of business from the first
employer (Hays) to the second employer (ERGT).
[16] A transfer of business is not defined in s.22(7) and takes its meaning from s.311.
[17] S.311 defines when a transfer of business occurs.
[18] The following preconditions must exist:
(1) the employment with the old employer must have terminated.
(2) within 3 months the employee must become an employee of the new employer.
(3) the work of the employee must be the same or substantially the same.
(4) there must be a connection between the old and new employer as defined.
[2015] FWC 2308
3
[19] In this case (2) and (3) are not disputed. While (1) was questioned, I accept that Ms
Burdziejko’s acceptance of a full time position with ERGT was incompatible with continuing
employment with Hays such that her employment with Hays terminated at that time.
[20] The parties are in dispute about whether there is a connection between the old and new
employer.
[21] There was no submission that Hays outsourced work to ERGT, so s.311(4) has no
application.
[22] S.311(5) provides:
(5) There is a connection between the old employer and the new employer if:
(a) the transferring work had been performed by one or more transferring
employees, as employees of the old employer, because the new employer, or an
associated entity of the new employer, had outsourced the transferring work to the old
employer or an associated entity of the old employer; and
(b) the transferring work is performed by those transferring employees, as
employees of the new employer, because the new employer, or the associated entity of
the new employer, has ceased to outsource the work to the old employer or the
associated entity of the old employer.
So did Burdziejko perform the same work or substantial the same work as an employee
of Hays because ERGT had outsourced the work to Hays and did then she perform the
work as an employee of ERGT because ERGT had ceased to outsource the work to
Hays?
[23] For the purposes of s.311(5), Hays is the old employer and ERGT is the new
employer.
[24] Ms Burdziejko contended that ERGT outsourced work to Hays and then ceased to
outsource the work to Hays. ERGT submitted that it did not outsource work to Hays because
it never required Hays to perform work for it. It simply required Hays to provide it with “a
warm body” to do the work. It was submitted that this was a straight labour hire arrangement
and not caught by s.311(5).
[25] Because ERGT had gained a new client, it needed an additional employee. It sourced
Hays to provide that labour as a labour hire company. Ms Burdziejko was then employed by
Hays as a customer services officer at ERGT.
[26] Outsource is defined in the Macquarie dictionary as “to contract (work) outside the
company rather than employ more in-house staff.”
[27] I was taken to three cases.
[2015] FWC 2308
4
[28] In Whitehaven Coal Mining Ltd1 the applicant was seeking an order that the industrial
instrument that applied to employees of TESA which provided labour hire services to
Whitehaven not apply to the transfer of employees from TESA to Whitehaven no longer
apply. While Whitehaven put that such an order may not necessary it sought one to put the
question beyond doubt. Deputy President Sams found that there was a connection between the
old and new employer by virtue of their outsourcing arrangements which are to continue; see
311(2) to (6).2
[29] In Kerry Thorne v Jura Australia Expresso Pty Ltd3 Commissioner Cargill in
determining that Ms Thorne had been employed for the minimum employment period held
that:
[47] The application or otherwise, of subsection (5), turns on whether the
arrangement by which Global had been providing labour could be considered to be
“outsourcing” or something else. The evidence of Mr Liakatos is that Global was the
company by which labour was provided for the shareholders of Jura. In my view the
fact that there was an arrangement by which other things such as vehicles and IT
services were provided does not mean it was not an outsourcing arrangement.
[48] I am satisfied that Jura had outsourced the transferring work to Global and, as
at the end of 2011, had ceased to outsource that work. It follows that subsection (5) is
met and, consequently, so is subsection (1). There has been a transfer of business and
the applicant is a transferring employee as contemplated by subsection (2).4
[30] ERGT distinguished Jura. Global provided other services unlike Hays which only
provided labour.
[31] In Gausden v Silvan Pty Ltd5 Commissioner Spencer had to determine if Mr Gausden
had been employed for the minimum period of employment. In that case like here Mr
Gausden had been employed by Davidson Recruitment who provided his labour to Silvan. In
that case Silvan submitted that the meaning to be given to “had outsourced .... work” is the
contracting out of a business function or process to a third party entity.” Silvan submitted that
Davidson Recruitment had no obligation to perform logistics and warehousing operations for
the Respondent, that they were engaged purely as supplementary labour.
[32] Silvan further submitted that the application of the transfer of business provisions of
the Act to labour hire arrangements “would be contrary to the object of Part 2-8 of the Act,
which relates to the interests of employers in running their enterprises effectively.”6
[33] Commissioner Spencer found that there was no connection between Davidson
Recruitment and Silvan except via the labour hire arrangement. She found that there was no
1 [2010] FWA 1142
2 Ibid at [12]
3 [2012] FWA 4954
4 Ibid at [47]-[48]
5 [2014] FWC 5337
6 Ibid at [26]-[28]
[2015] FWC 2308
5
evidence of a transfer of business or a transfer of assets, nor was Mr Gausden a transferring
employee.7
[34] I was not taken to any full bench authorities dealing with this issue.
[35] It was submitted by ERGT that there would be a different outcome if Hays was
contracted to provide wider services to ERGT.
[36] The difference is as follows. Company A decides it wants to contract out its
maintenance work and it enters into a contract for the provision of maintenance services with
Company B. This on ERGT’s contention would be an outsourcing of work. Alternatively
Company A decides that it does not want to engage its maintenance workforce directly and
engages a labour hire company, Company C, to provide workers only. In that situation on
ERGT’s submission there would be no outsourcing of work. Subsequently in both examples
Company A changes its mind and decides to again employ the workers doing the maintenance
work directly. In the first example the employees’ service with Company B would count as
service with Company A unless advised in advance in writing that it would not count. In the
second example the employees’ service with Company B would not count.
[37] I do not accept the submission of ERGT that it did not outsource the work because
prior to employing Ms Burdziejko the work performed by Ms Burdziejko was not required to
be performed. ERGT employed customer service officers. Because it had gained a new client
it had additional work that it needed to be performed. Instead of engaging an employee to
perform that work, it engaged Hays to provide a person to perform that work. It outsourced
the work to Hays. Further, after a period of time, it decided that it no longer wanted Hays to
perform that work and decided to perform the work in house and employed Ms Burdziejko to
do the same work.
[38] Unless the contract with Hays is a sham, upon engaging Hays to provide labour ERGT
is no longer performing that work. Instead of ERGT engaging labour to perform the work
Hays engaged the labour to perform work.
[39] The transfer of business provisions in the Fair Work Act 2009 were intended to have
wider application than that provided for in the predecessor acts where the focus was on
whether there was a transfer of the business between the old employer and the new employer.
The application of the predecessor provisions focused the character of the business in the
hands of the old employer and the new employer. The Explanatory Memorandum makes it
clear that the new provisions do not focus on whether the new employer had taken over that
business or part thereof but whether there has been a transfer of work between the two
employers and the reason for the transfer of that work.8
[40] One only needs to take the words of the Act and apply it here.
(a) the transferring work had been performed by one or more transferring employees
(Ms Burdziejko), as employees of the old employer (Hays), because the new employer
(ERGT), had outsourced the transferring work to the old employer (Hays); and
7 Ibid at [41]
8 Fair Work Explanatory Memorandum
[2015] FWC 2308
6
(b) the transferring work is performed by those transferring employees (Ms
Burdziejko), as employees of the new employer (ERGT), because the new employer
(ERGT), , has ceased to outsource the work to the old employer (Hays).
[41] I therefore accept that there is a connection between the old employer (Hays) and the
new employer (ERGT) such that there was a transfer of business from Hays (the first
employer) to ERGT (the second employer).
[42] An employee is required to have served six months (one year if employed by a small
business) employment to be protected from unfair dismissal.
[43] S.383 of the Fair Work Act 2009 provides as follows:
383 Meaning of minimum employment period
The minimum employment period is:
(a) if the employer is not a small business employer—6 months ending at the earlier of
the following times:
(i) the time when the person is given notice of the dismissal;
(ii) immediately before the dismissal; or
(b) if the employer is a small business employer—one year ending at that time.
[44] In this matter ,Ms Burdziejko commenced employment with Hays on 3 June 2014 and
her employment with ERGT was terminated on 19 December 2014. Ms Burdziejko was not
advised prior to the commencement of her employment with ERGT that her service with Hays
would not be recognised. Because Ms Burdziejko was a transferring employee in relation to a
transfer of business her service with Hays counts as service with ERGT.
[45] As Ms Burdziejko had served the minimum period of employment at the date of her
dismissal, she was protected from unfair dismissal and ERGT’s objection is dismissed.
[46] Ms Burdziejko’s application is therefore referred to conciliation and if the application
is not resolved, the application will be referred to a hearing/conference for determination by a
member of the Commission.
DEPUTY PRESIDENT
FAIR WORK COMMISSION AUSTRALIA THESEAL OF
[2015] FWC 2308
7
Appearances:
N. Burdziejko on her own behalf.
S. Heathcote for the Respondent.
Hearing details:
2015.
Melbourne and Perth, by telephone:
25 March.
Printed by authority of the Commonwealth Government Printer
Price code C, PR562735
