1
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Jared Abbott
v
Acciona Infrastructure Australia Pty Ltd
(U2018/2116)
DEPUTY PRESIDENT ASBURY BRISBANE, 7 SEPTEMBER 2018
Application for an unfair dismissal remedy – Jurisdictional objection – Whether applicant has
met minimum employment period – Whether applicant’s service with former labour hire
company and respondent is continuous – Whether a connection between labour hire employer
and respondent under s.311(5) of the Fair Work Act 2009 – Whether work of applicant was
outsourced and ceased to be outsourced when new employment began – No connection found
between labour hire company and respondent – Jurisdictional objection upheld – Application
dismissed.
BACKGROUND
[1] Mr Jared Abbott applies under s. 394 of the Fair Work Act 2009 (the Act) for an unfair
dismissal remedy in respect of the termination of his employment by Acciona Infrastructure
Australia Pty Ltd (Acciona). Acciona objects to the application and contends that Mr Abbott
was not a person protected from unfair dismissal under s.382 of the Act, as he had not met the
minimum employment period defined in s.383 of the Act.
[2] Acciona is part of a joint venture known as Nexus Delivery (Nexus) which is
undertaking the construction of the Toowoomba Second Range Crossing Project (the Project).
In addition to its own employees, Acciona utilises labour hire companies to provide
employees to perform work on the Project. DBS Queensland Pty Ltd (Dowells) is a labour
hire company which provides labour for the Project.
[3] Mr Abbott is a carpenter. On 18 April 2017, Mr Abbot was employed by DBS
Queensland Pty Ltd (Dowells) to perform work on the Project and Mr Abbot worked for
Dowells on the Project until 29 September 2017 when Mr Abbot’s employment with Dowells
ended. Mr Abbott commenced employment with Acciona on 3 October 2017 and remained in
that employment until 8 February 2018. In order to make an unfair dismissal application Mr
Abbott must establish that his service with Dowells and Acciona is continuous so that he has
completed a minimum employment period of six months. Other than the issue of whether he
has completed the necessary minimum employment period, Mr Abbott is a person protected
from unfair dismissal.
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DECISION
E AUSTRALIA FairWork Commission
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[4] A hearing was held on 27 July 2017. Permission was granted for both parties to
represented by lawyers pursuant to s. 596 of the Act on the basis that I was satisfied that it
would enable the matter to be dealt with more efficiently taking into account its complexity
and that no issue of fairness arose. Mr Abbott was represented by Mr L Tiley, Solicitor, Hall
Payne Lawyers and Acciona by Mr M Rawlings of Counsel instructed by DWF. Mr Abbott
gave made two statements which were tendered into evidence. Mr Abbott was also cross-
examined. Acciona tendered a statement made by Mr Steven Ingham, HR Manager for the
Nexus on the Project. Mr Ingham was not required for cross-examination.
LEGISLATION
[5] By virtue of s. 382(a) of the Act, one of the criteria for a person to be protected from
unfair dismissal is that the person is an employee who has completed a minimum period of
employment with his or her employer. Acciona is not a small business and s. 383 provides
that the minimum period Mr Abbot must have completed is six months ending at the earlier of
the time when he was given notice of the dismissal or immediately before the dismissal.
Section 384(1) provides that an employee’s period of employment at a particular time, is the
period of continuous service the employee has completed with the employer at that time as an
employee. Section 384(2) deals with when casual employment counts toward a period of
employment and provides as follows:
“384 Period of employment
An employee’s period of employment with an employer at a particular time is the period of continuous
service the employee has completed with the employer at that time as an employee.
However:
(a) a period of service as a casual employee does not count towards the employee’s period of
employment unless:
(i) the employment as a casual employee was on a regular and systematic basis; and
(ii) during the period of service as a casual employee, the employee had a reasonable
expectation of continuing employment by the employer on a regular and systematic basis; and
(b) if
(i) the employee is a transferring employee in relation to a transfer of business from an old
employer to a new employer; and
(ii) the old employer and the new employer are not associated entities when the employee
becomes employed by the new employer;
(iii) the new employer informed the employee in writing before the new employment started
that a period of service with the old employer would not be recognised;
the period of service with the old employer does not count towards the employee’s period of
employment with the new employer.”
[6] The meaning of continuous service is set out in s. 22 of the Act. Relevantly in the
present case, sub-sections (5) and (7) of s. 22 deal with whether an employee’s service is
continuous when there is a transfer of employment of the employee from one employer to
another and provides as follows:
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“22 Meanings of service and continuous service
…
When service with one employer counts as service with another employer
(5) If there is a transfer of employment (see subsection (7)) in relation to a national system employee:
(a) any period of service of the employee with the first employer counts as service of the
employee with the second employer; and
(b) the period between the termination of the employment with the first employer and the start
of the employment with the second employer does not break the employee’s continuous service
with the second employer (taking account of the effect of paragraph (a)), but does not count
towards the length of the employee’s continuous service with the second employer.
Note: This subsection does not apply to a transfer of employment between non associated entities,
for the purpose of Division 6 of Part 2 2 (which deals with annual leave) or Subdivision B of Division
11 of Part 2 2 (which deals with redundancy pay), if the second employer decides not to recognise the
employee’s service with the first employer for the purpose of that Division or Subdivision (see
subsections 91(1) and 122(1)).
…
Meaning of transfer of employment etc.
(7) There is a transfer of employment of a national system employee from one national system
employer (the first employer) to another national system employer (the second employer) if:
the following conditions are satisfied:
(i) the employee becomes employed by the second employer not more than 3 months after the
termination of the employee’s employment with the first employer;
(ii) the first employer and the second employer are associated entities when the employee becomes
employed by the second employer; or
the following conditions are satisfied:
(i) the employee is a transferring employee in relation to a transfer of business from the first
employer to the second employer;
(ii) the first employer and the second employer are not associated entities when the employee
becomes employed by the second employer.
Note: Paragraph (a) applies whether or not there is a transfer of business from the first employer to
the second employer.
Insert s. 22(5) and (7)”
[7] It is common ground that Acciona and Dowells are not associated entities for the
purposes of s. 22(7)((a). Section 311of the Act deals with transfer of business and relevantly
provides at subsection (1):
“311 When does a transfer of business occur
Meanings of transfer of business, old employer, new employer and transferring work
(1) There is a transfer of business from an employer (the old employer) to another
employer (the new employer) if the following requirements are satisfied:
(a) the employment of an employee of the old employer has terminated;
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(b) within 3 months after the termination, the employee becomes employed by
the new employer;
(c) the work (the transferring work) the employee performs for the new
employer is the same, or substantially the same, as the work the employee performed for the
old employer;
(d) there is a connection between the old employer and the new employer as
described in any of subsections (3) to (6).
[8] Mr Abbott relies on s. 311(5) to establish the requisite connection. Section 311(5) of
the Act provides as follows:
“New employer ceases to outsource work to old employer
(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.”
ISSUES IN DISPUTE
[9] In written submissions filed prior to the hearing Acciona conceded that in the present
case, the requirements of s. 311(1)(a) – (c) have been met and that:
Mr Abbott’s employment with Dowells has terminated;
Mr Abbott became employed by Acciona within three months of the termination;
and
The transferring work is the same or substantially the same as the work Mr Abbott
performed for Dowells.
[10] In oral submissions at the hearing, Mr Rawlings on behalf of Acciona made the further
concession that for the purposes of s. 384(2)(a) of the Act, Mr Abbott’s service with Dowells
as a casual employee was regular and systematic and that he had a reasonable expectation of
continuing employment on a regular and systematic basis.1
[11] The issue for determination is whether there is a connection between Dowells and
Acciona as provided in s. 311(5) of the Act on the basis that the work was outsourced by
Acciona to Dowells and that the outsourcing ceased when Mr Abbott was employed by
Acciona. Acciona also asserts that Mr Abbott was put on notice by Acciona that his service
with Dowells would not be recognised when he received the offer of employment from
Acciona, and that this was sufficient to meet the requirements in s. 384(b)(iii) for his service
with Dowells not to be recognised by Acciona.
CASE LAW IN RELATION TO s. 311(5)
[12] It has been observed in a number of cases that there is no definition of “outsourcing”
in the Act. It is also the case that there is no full bench authority directly on point in relation
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to the operation of s. 311(5) in the context of an employee of a labour hire company who is
employed by the labour hire company at a particular site or on a particular project and ceases
employment with the labour hire company to take up employment with an entity on the same
site or project, including the entity which owns or controls the site or operates the business in
which the labour hire employee was engaged.
[13] The Explanatory Memorandum for the Act deals with s. 311(4) and s. 311(5) by
reference to a cumulative example. In relation to s. 311(4) the example is a human resource
management company employing four security guards to staff its reception desk and which
decides it no longer wishes to employ security guards and enters into a contract with a
security firm to provide the services. In the example given, the security firm employs all four
guards who perform the same work for the security company. This is said to constitute a
transfer of business.
[14] In relation to s. 311(5) the same example is used on the basis that after two years, the
human resource management company decides that it no longer wishes to outsource the
security work and terminates its contract with the security firm and offers employment to the
security guards employed by the security firm. Those guards accept the offers of employment
and perform the same work as employees of the human resource management company as
they did for the security company. This is also said to be a transfer of business.
[15] Notwithstanding that there is no full bench authority on s. 311(5) there are a number of
decisions of single members of the Commission in relation to this issue. In Burdziejko v
ERGT Australia Pty Ltd2 the applicant was employed by a labour hire company to work at
ERGT Australia Pty Ltd (ERGT) and was offered ongoing employment by ERGT after three
months. ERGT contended that there had been no transfer of business on the basis that the
labour hire company had not undertaken any part of ERGT’s business and that ERGT had not
terminated an arrangement with the labour hire company. It was also submitted that ERGT
had simply contracted with the labour hire company to provide labour and had never required
the labour hire company to perform work for ERGT.
[16] ERGT in that case sought to distinguish circumstances where a company contracts out
wider services – for example maintenance work – and enters into a contract for the provision
of that work with another company, from circumstances where a company just seeks to hire
workers to perform maintenance work from a labour hire company. ERGT argued that in the
first case there is outsourcing and in the second case there is not. Deputy President Gooley
held:
“[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
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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.
[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
(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).”3
[17] In Sapienza v Cash in Transit Pty Ltd T/A Secure Cash,4 Deputy President Gooley
found that there was a connection between two entities as provided in s. 311(5) on the basis
that one entity contracted another entity to perform work for it in Western Australia and then
made a decision to perform the work itself,5 and employed the persons who had previously
been performing the work.
[18] In Thorne v Jura Australia6 a company referred to in the decision as “Coffee” entered
into an agreement with another company “JEAG”, under which a third company, “Global”,
would provide labour to a fourth Company, “Jura” to sell coffee machines. The agreement
also provided for the provision of other items such as vehicles and information technology
systems. It was also the case that JEAG and Jura were related entities, as were Coffee and
Global. The agreement ended and the employees were offered positions with Jura. Jura
submitted that the question of whether s. 311(5) was relevant depended on the meaning of the
term “outsource” and that the term did not cover every arrangement in which labour is
provided by another entity. Jura contended that the arrangement was a service agreement and
that it was a pure joint venture rather than an outsourcing arrangement and the termination of
the arrangement did not trigger the application of s. 311(5). Commissioner Cargill held:
“[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).”
[19] In Gaudsen v Silvan Pty Ltd7 the applicant was employed on a casual basis by a labour
hire company to undertake work as a store person at the premises of another company, Silvan.
The applicant’s employment with the labour hire company terminated and the next day he
commenced employment with Silvan performing the same work. Silvan contended that the
applicant’s service was not continuous on the basis that it had not outsourced the work of
warehousing and logistics but rather had engaged the applicant through the labour hire
company, as supplementary labour. Silvan also sought to distinguish the facts in Jura on the
basis that Jura involved an outsourcing arrangement which ceased resulting in the work being
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brought back “in house”. Silvan further argued that the third party in Jura was not a labour
hire company. In finding that the employee had not served a minimum employment period,
Commissioner Spencer held that while the work undertaken by the applicant for the labour
hire company and Silvan was similar, there was no connection between the two entities except
via the labour hire arrangement and that the required connection was not established for the
purposes of s. 311(5).8
[20] In Cokuzovski v Yarra City Council an employee who was employed by the Council as
a parking attendant from 15 May 2017 until 27 August 2017 had performed work for the
Council from March 2013 until 14 May 2017 – the day before the employee was employed by
the Council. The Council argued that the employee was not protected from unfair dismissal as
he had not served the minimum employment period. The employee argued that he had been
offered and had accepted direct employment with the Council in 2013 and alternatively, that
he was a transferring employee in relation to a transfer of business from the labour hire
company to the Council. The Council maintained that there was no transfer of business from
the labour hire company to the Council.
[21] Deputy President Millhouse rejected the employee’s primary argument and found that
he was not employed by the Council prior to 15 May 2017. The facts as set out by the Deputy
President were that the Council had previously employed parking officers directly and had
used labour hire employees to supplement its workforce. The Council had continued to
directly employ some parking officers. Deputy President Millhouse went on to consider
whether there was a connection between the labour hire company and the Council by virtue of
s. 311(5) of the Act. The Deputy President held that in order for there to be a ceasing of
outsourcing for the purposes of that section, there must first be outsourcing. This required
consideration of whether the arrangement by which the labour hire company provided labour
to the Council was outsourcing.
[22] In considering this question, Deputy President Millhouse adopted the definition of
outsourcing in the Macquarie Dictionary referred to by Deputy President Gooley in
Burdziejko as: “to contract (work) outside the company rather than employ more in-house
staff.” Deputy President Millhouse found that when the Council determined that it no longer
wished to perform as much of the parking officer work and engaged a third party to perform
that work, it outsourced the parking control officer work. However, the Deputy President
went on to conclude that the Council had not ceased to outsource work when it employed the
applicant on the basis that the arrangements with the labour hire company for the supply of
contingent labour to perform parking officer work remained on foot. Further, the Council
continued to directly employ parking officers. The Deputy President held that:
“[91] The mere fact that the Respondent offered the Applicant direct employment in the Position,
carrying out work that has continued to be performed in house, does not mean that the Respondent has
ceased to outsource the parking control officer work. There continues to be the same scope of
outsourcing of the parking control officer work by the Respondent. The outsourcing has continued,
unaffected by the direct employment of the Applicant. It is clear on the evidence that it has not ceased.
[92] I accept the Respondent’s submission that the matter before me can be distinguished from the
decision in Burdziejko given the different factual circumstances.
[93] Accordingly, I am not satisfied that the direct employment of the Applicant means that the
Respondent has “ceased to outsource the work” pursuant to s.311(5) of the Act.”
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[23] Deputy President Millhouse went on to conclude that there was no connection between
the labour hire company and the Council as required by s. 311(1)(d) of the Act and
accordingly there was no transfer of business from the labour hire company to the Council
and the employee was not a transferring employee.
EVIDENCE AND SUBMISSIONS
[24] The evidence and submissions relevant to the issues for determination in this case can
be summarised as follows. Mr Abbott said that in late June or early July 2017, he became
aware that four or five of his colleagues had transferred from Dowells to being direct
employees of Nexus Delivery. In early September 2017 a Project engineer approached Mr
Abbott and asked whether he wanted to be on the books of Nexus and was interested in
coming across. Mr Abbott said that he said yes to this proposal because there was greater job
security and better conditions. When Mr Abbott started working for Acciona there was no
discussion about his past service with Dowells and whether it would count with Acciona. Mr
Abbott also said that he was not told that his service would not count and maintained that he
had a total of 42 weeks service when he was dismissed comprising 24 weeks with Dowells
and 18 weeks with Acciona.
[25] Mr Abbott tendered the letter of offer provided to him on 29 September 2017. The
letter of offer confirms that his employer is Acciona Infrastructure Australia Pty Ltd and that
he will be joining the Nexus Delivery team. The letter confirms that Mr Abbott’s employment
will commence on 3 October 2017 and will continue until he is released by Nexus Delivery
when his role is no longer required, unless his employment is terminated earlier. The letter of
offer also provides that:
“B. Employment Conditions
1) Your employment conditions will be governed by the ACCIONA Infrastructure Australia Pty Ltd
Enterprise Agreement 2014 (the 'EA'), a copy of which is attached. The EA outlines wage rates and
other terms of your employment, including entitlements and information specific to your position.
2) Your primary employment designation is: CW 5 Classification in the EA. In addition to performing
any duties within your assigned classification group you will perform additional duties as reasonably
and lawfully directed by your Supervisor to meet Project needs, provided that such duties are within
your skills, competence, qualifications and training.
3) Under the terms of the EA, you will initially be engaged for a six (6) month probationary period.
During this time we will assess your progress and performance, and may end your employment by
providing 1 week's notice. Thereafter, your employment may be terminated as provided for in the EA.”
[26] Under cross-examination Mr Abbott agreed that Mr Purkis, who worked for Dowells
as a Supervisor or HSC [Health and Safety Co-ordinator] and who Mr Abbot had reported to
while working for Dowells, remained on site after Mr Abbott took up employment with
Acciona, and was supervising other employees of Dowells who were also still working on the
Project at that time.
[27] Mr Ingham’s evidence is that Mr Abbott was employed as part of a general
recruitment exercise that included the placement of advertisements on the “Seek” website. Mr
Ingham said that prior to commencing employment with Acciona, Mr Abbott worked on the
Project as a day to day casual employed by Dowells. Dowells is contracted to Nexus Delivery
to provide labour on the project. Dowells continue to supply labour to the Project and at the
time Mr Ingham made his statement, Dowells supplied 10 – 12 employees to undertake
concrete line drainage works in an area of the Project. Mr Ingham also said that workers
supplied by Dowells continue to be used on the Project on an “as needs” basis. Further, Mr
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Ingham said that Dowells continued to supply labour to an area of the Project termed Central
bridges up to the end of April 2018, when work on some of the bridges was coming to an end.
Between January and April 2018 Dowells had up to 20 workers in the Central bridges area
with an average of ten present each day.
[28] Mr Tiley on behalf of Mr Abbott contended that Acciona bears the onus of
establishing that the Commission does not have jurisdiction to deal with Mr Abbott’s
application in circumstances where Acciona raised the jurisdictional objection. Mr Abbott
maintains that his total period of continuous service, properly counted, will include his service
with Dowells immediately prior to his commencing with Acciona. The necessary connection
between Dowells and Acciona exists on the basis that Acciona decided to cease outsourcing
the work performed by Mr Abbott and bring Mr Abbott and the work performed by him, in
house.
[29] There is no requirement that there be any connection in the sense of ownership or
transfer of assets between the two entities. Further, the proposition that immediate past service
– albeit on a casual basis – with a labour hire firm counts as service with a host employer for
the purposes of the minimum employment period, is supported by the case law. In this regard
reference was made to the decision of Deputy President Gooley in Burdziejko, where the
submission that outsourcing had not occurred because prior to employing the applicant in that
case, the work was not required to be performed by persons employed by the company was
repeated. Further, in Burdziejko it was sufficient that the company had decided that additional
work would be performed by employees of a labour hire company and had later decided that
the work would be performed in house and had employed the applicant to do the same work.
[30] Mr Tiley submitted that the reasoning in Burdziejko makes it plain that where work
that was previously outsourced is brought in house by an employer, then provided that ss.
311(1)(a) – (d) are satisfied, a transfer of business will be deemed to have occurred for the
purposes of s. 384(2)(b) of the Act. In circumstances were Mr Abbott was not advised that his
service with Dowells would not be recognised by Acciona, Mr Abbott’s total period of
continuous service comprises his 24 weeks of continuous service with Dowells in addition to
his 18 weeks of continuous service with Acciona. As a result, when Mr Abbott was notified
by Acciona of the termination of his employment he had completed in excess of six months
continuous service and was a person protected from unfair dismissal.
[31] In oral submissions Mr Tiley contended that the concession by Acciona that the work
performed by Mr Abbott for Acciona was the same or substantially the same as the work he
performed for Dowells, was a significant one. This is the case because the focus of s. 311(5)
is on the transferring work being done by the particular employee rather than the entirety of
the commercial arrangements between Acciona and Dowells.
[32] Support for the proposition was said by Mr Tiley to be found in three sources. The
first is the use of the singular in the terms of s. 311(5) which provides that “the transferring
work had been performed by one or more transferring employees”. The second is the relevant
part of the Explanatory Memorandum, where the singular “employee” is also used. The third
is the decision of Deputy President Gooley in Burdziejko where it was held that s. 311(5)
applied in the case of a single employee where work was sent outside the business and
brought back. Mr Tiley submitted that s. 311(5) was engaged when the work performed by
Mr Abbott was sent outside Nexus to Dowells and was then brought back in. Contrary to the
decision in Cokuzovski there was no requirement that the work first existed in house, and the
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approach in Burdziejko should be preferred to that in Cokuzovski. Further, given that the facts
in this matter are closer to those in Burdziejko than to those in Cokuzovski, the former case
should be followed.
[33] Mr Tiley submitted that if the drafters of the legislation had intended that there be a
third step requiring the work to be in house before it was outsourced, this requirement would
be clearly stated, and the Commission should not insert this third requirement. Mr Tiley
further submitted that to apply s. 311(5) in the manner contended for by Mr Abbott would not
create a stampede of applicants to the Commission as all that employers are required to do to
avoid the transfer provisions is to write to a transferring employee advising that previous
service will not be recognised.
[34] Mr Abbott was not provided with such notice and the best that Acciona can say is that
Mr Abbott’s contract of employment had a probationary period which was in effect written
notice to Mr Abbott that his previous employment with Dowells would not be recognised.
This submission is wrong on the basis that a contractual probationary condition cannot
remove the benefit of a statutory provision or defeat the operation of the statutory regime of
protection from unfair dismissal.
[35] Acciona contends that Mr Abbott has the onus of establishing that there was a transfer
of business between Dowells and Acciona and that his period of service as a casual employee
with Dowells should count towards his period of employment. In oral submissions Mr
Rawlings for Acciona said that Acciona is required to establish the factual basis for a
jurisdictional objection and the onus then shifts to the applicant to establish that there is
standing for the application to proceed. In support of this proposition, Mr Rawlings referred
to the decision in Abdalla v Viewdaze9 where a Full Bench of the Australian Industrial
Relations Commission held that a Respondent raising a jurisdictional objection bears an
“evidentiary onus” which it must discharge in order to put the Commission’s jurisdiction in
issue by leading evidence or making factual submissions, which if accepted would lead to the
conclusion that the Commission had no jurisdiction. The Full Bench went on to hold that:
“Once that ‘onus’ has been discharged, the ‘onus’ passes back to the Applicant who bears the ultimate
responsibility for establishing that the application is within jurisdiction. Where…the evidence before
the Commission is insufficient to enable it to come to a conclusion favourable to the mover of the
motion on an issue which has to be determined, the motion should be dismissed.”10
[36] Acciona concedes that Mr Abbott’s employment with Dowells was terminated and
that he was employed by Acciona within three months of the termination, and that the
transferring work is the same or substantially the same as the work Mr Abbott performed for
Dowells. In order to establish the requisite connection between Dowells and Acciona Mr
Abbott must successfully prove that Acciona outsourced the work to Dowells and that Mr
Abbott performed the work for Acciona because it ceased to outsource the work to Dowells.
[37] Acciona contended that as the present case only involves the provision of
supplementary labour, Acciona had not outsourced the transferring work to Dowells. The
term “outsource” is not defined in the Act and while Mr Abbott relies heavily on the decision
in Burdziejko, Acciona submits that the decision in Gausden should be followed so that the
natural and ordinary meaning of the phrase “had outsourced … work” is found to involve the
contracting out of a business function or process and does not encompass the engagement of
only supplementary labour. As the present matter only involved the provision of
supplementary labour, Acciona did not outsource the transferring work to Dowells.
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[38] Acciona further contends that even if the approach in Burdziejko is followed and the
Commission finds that the work was outsourced to Dowells, this does not mean that by
offering the work to Mr Abbott, Acciona has ceased to outsource that work. This is consistent
with the decision in Cokuzovski and the facts in the current case can be similarly distinguished
from Burdziejko. In this regard, Acciona pointed to the evidence that from the commencement
of Mr Abbott’s employment with Acciona, Dowells provided supplementary labour to the
Project and continues to do so.
[39] In relation to its assertion that Mr Abbott was put on notice that his employment with
Dowells would not be recognised when he received the offer of employment from Acciona on
29 September 2017, Acciona pointed to the statement in the offer of employment that Mr
Abbott’s employment was subject to a six month probationary period and that his
employment could be terminated by one weeks’ notice. Acciona submitted that this clause
would have no utility if Mr Abbott’s service with Dowells was to be recognised and
consequently Mr Abbott was on notice from 29 September 2017 that his service would not be
recognised.
[40] In relation to the provisions of the Act relevant to the present dispute, Mr Rawlings
pointed to other provisions of s. 311 – subsections (4) and (6) – and submitted that these
subsections relate to the corporate structure of a company and how its workforce is managed
in order to undertake particular tasks. The subsections do not relate to engagement of
employees on an individual day to day level. In relation to s. 311(5)(a) Mr Rawlings
submitted that the term “transferring work” on a natural reading, seems to refer to all of the
work that was outsourced. This is also apparent from s. 311(5)(b) which indicates that the
new employer has ceased to outsource the work. The work should be considered as a whole.
Support for this construction is also found in the heading of the sub-clause – “New employer
ceases to outsource work to old employer” – which suggests that the work for the purposes of
the subsection is the work as a whole and that the subsection refers to the ending of the
arrangement between the old employer and the new employer.
[41] Acciona submits that the term “work” needs a scope to contain it and that the scope
is the outsourcing agreement by which the work is transferred. In the present case, the
arrangement between Dowells and Acciona continued and there was simply an offer of
employment to Mr Abbott as an individual while labour hire arrangements continued for other
employees of Dowells. Therefore an individual moved rather than an outsourcing of work.
Accordingly the facts were the same as those in Cokuzovski and could be contrasted with
those in Burdziejko where there was only one employee provided by the labour hire company
to do a job. Accordingly, the same principle was applied in both cases and the outcome was
different because in Burdziejko there was no evidence that a labour hire arrangement was
ongoing so that outsourcing continued.
[42] Mr Rawlings also referred to the example in the Explanatory Memorandum as
supporting Acciona’s argument on the basis that in that example all of the security guards
provided by the contractor were employed by the employer so that the scope of the work was
the entire outsourcing arrangement.
[2018] FWC 5609
12
CONSIDERATION
[43] The term “outsource” is not defined in the Act. I accept that the term should be given
its ordinary meaning – to contract work outside a company rather than employ more in-house
staff. I also accept that on the plain wording of s. 311(5) there is no apparent requirement that
work must have been done in-house before it can be outsourced. In my view, the term
“outsource” can apply equally in cases where an employer currently undertakes work in-
house or where it plans to undertake new work and decides that rather than directly employing
persons to undertake that work, it will outsource the work so that it is undertaken by an
external provider.
[44] I do not accept that the term “outsource” applies to any circumstance where an
employer engages labour from an external supplier to undertake any work within the
employer’s business. The provisions focusing on the work of a particular employee are found
in s. 311(1)(a) – (c) . Where those are met, there is an additional requirement in s. 311(d) that
there be a connection between the old employer and the new employer as described in any of
subsections 311(3) – (6). In establishing such a connection for the purposes of those
subsections, the term “outsource” must have some work to do. That term in my view, directs
attention to the outsourcing arrangement which is the arrangement between the entity
outsourcing the work and the entity which will perform the work. It is only where such an
arrangement is in place that a connection between two employers as provided in s. 311(4) and
(5) will be established. In short, something more than an employee ceasing to perform
particular work for one employer and commencing to perform the same or substantially the
same work at the same location for another employer is required.
[45] If this was not the case then there would be no requirement to use the term
“outsource” and the legislation would simply state that where an employee performs work in
a particular workplace for one employer and is offered substantially the same work in the
same workplace by another employer, the service of the employee will be deemed continuous.
Clearly the additional requirement that there be a connection must operate on the basis of
something additional. Each of the subsections 311(3) – (6) provide for additional
requirements to establish a connection for the purposes of s. 311(d).
[46] An employer contracting with a labour hire company for the labour hire company to
provide an employee of the labour hire company to supplement its workforce or to replace an
absent employee will not automatically be found to have outsourced the relevant work.
Rather, the employer may simply be engaging additional labour in a flexible manner, to
ensure that it can continue to undertake particular work. Conversely, it does not follow that an
employer who has engaged an employee of a labour hire company to supplement its own
workforce, or to replace an absent employee and then after a period of time offers that
employee employment within its business, will be found to have ceased to outsource the work
the relevant employee was previously undertaking.
[47] In my view there is a distinction between an employer engaging supplementary labour
through a labour hire company and outsourcing work. There will be occasions where the
distinction is difficult to establish and the side of the line that a particular case falls on will be
determined by the facts and circumstances of that case including:
The nature of the arrangement between the provider of the labour and the company
engaging the labour;
[2018] FWC 5609
13
Whether that arrangement continues after the putative outsourcing has taken place;
Whether all or some of the labour hire employees in the particular workplace are
offered employment at the time of the putative cessation of the outsourcing; and
Whether the company engaging the labour has some employees “in house” who are
carrying out the work and will continue to do so.
[48] The approach to applying s. 311(5) I favour is not inconsistent with the plain words in
the legislation. Outsourcing can occur when one employee or a number of employees are
involved. This approach is not inconsistent with the example in the Explanatory
Memorandum which indicates that all of the relevant employees (security guards) were
provided by a contract security company and were all offered employment in the workplace
where they had been engaged to perform the same work as direct employees of the employer
that operated that workplace. Accordingly, there was outsourcing and a subsequent cessation
of outsourcing,
[49] This approach does not necessarily give rise to an inconsistency in the decided cases
referred to by the parties. In Burdziejko it does not appear that there was a great deal of
evidence about the arrangement between the two relevant entities. The second entity in that
case did employ other employees termed customer service officers and contended that the
applicant was engaged to supplement its labour force because it obtained a new client. It is not
clear whether there were any other employees provided by the labour hire company as
supplementary labour at the relevant time. It is also not clear whether the employee in that
case only performed work for the new client which had generated the additional workload, or
whether the work for that new client was different than the work performed in house for other
clients. It is also not apparent that the labour hire arrangement continued after the putative
outsourcing or that the labour hire company continued to provide employees to the employer
in question after the applicant took up employment with that employer.
[50] In Sapienza it is apparent that all of the work in a particular state was outsourced to
another entity in accordance with a contract between the two entities and was then brought in
house in circumstances where the employees employed by one party to the contract who had
been performing the work subject of the contract were offered employment with the other
party to the contract. This was also the case in Jura where there was an agreement between
two entities for the provision of labour and a number of the employees engaged by one entity
pursuant to that contract were offered and accepted employment with the other entity party to
the contract, in circumstances where the former entity had performed all of the relevant work
for the latter entity.
[51] In Gausden there was a contract for the provision of labour by a labour hire company
to an employer which operated a warehouse and the applicant in that case was engaged in the
course of the labour hire company providing supplementary labour.11 It follows that the
employer in that case employed other persons to carry out warehousing duties such that it
could not be said that it had outsourced that function. It is also probable that given the nature
of the labour hire arrangement, it remained in effect after the employment of the applicant in
that case had ceased. This was certainly the case in Cokuzovski and is the basis for
distinguishing that case from Burdziejko.
[52] On the facts in the present case, Acciona as a part of the Nexus Delivery Joint
Venture, directly employed some of the employees who were performing work on the Project.
At the same time, Acciona supplemented its direct labour force with additional employees
[2018] FWC 5609
14
provided by Dowells, a labour hire company. The arrangement between Acciona and Dowells
for the supply of labour was in place before Mr Abbott was employed by either entity and
continued after Mr Abbott commenced employment with Acciona. I do not accept that this
arrangement is outsourcing. I also do not accept that in the circumstances of this case, by
offering employment to Mr Abbott, Acciona ceased to outsource the work Mr Abbott had
previously performed as an employee of Dowells. Accordingly I am not satisfied as required
by s. 311(5) that the work was outsourced or that outsourcing had ceased.
[53] For completeness, I do not accept the submission that the terms of the written contract
of employment between Acciona and Mr Abbott placed Mr Abbott on notice that his service
with Dowells would not be recognised. The mere act of establishing a probationary period in
a contract of employment does not constitute informing Mr Abbott in writing that his service
with Dowells would not be recognised in the manner contemplated in s. 384(b)(iii). That
provision clearly requires that the employee be informed of this specific matter, and not that
the employee is put on notice that an inference should be drawn from an apparently unrelated
contractual term. It is also the case that such a term cannot overcome protections under the
Act afforded to employees such as protection from unfair dismissal.
CONCLUSION
[54] I find that there was no connection between Acciona and Dowells as required by s.
311(d) of the Act. Accordingly, there was no transfer of business between Dowells and
Acciona and Mr Abbott was not a transferring employee. As I am not satisfied in relation to
these matters, the conditions in s. 22(7) and s. 22(5) are not satisfied and the service of Mr
Abbott with Dowells does not count as service with Acciona.
[55] Mr Abbott was employed by Acciona on 3 October 2017 and his employment was
terminated on 8 February 2018. At that time he had been employed by Acciona for 18 weeks
and accordingly had not completed a minimum period of employment of at least six months.
Accordingly, Mr Abbott is not a person protected from unfair dismissal and his application
for an unfair dismissal remedy must be dismissed. An Order to that effect will issue with this
Decision.
DEPUTY PRESIDENT
Appearances:
Mr L Tiley of Hall Payne Lawyers on behalf of the Applicant.
Mr M Rawlings instructed by DWF on behalf of the Respondent.
FAIR AL OF THE FAIR WORK MMISSION THE SEAL OF THE
[2018] FWC 5609
15
Hearing details:
2018.
27 July.
Brisbane.
Printed by authority of the Commonwealth Government Printer
PR700138
1 Transcript of 27 July 2018 at PN86
2 [2015] FWC 2308.
3 Ibid at [37] – [41].
4 [2017] FWC 5939.
5 Ibid at [7] and [14] Fact 2.
6 [2012] FWA 4954.
7 [2014] FWC 5337.
8 Ibid at [41].
9 14 May 2003 PR927971.
10 Ibid at [66].
11 [2014] FWC 5337 at [42].
