| [2018] FWC 6242 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Ricky Taulapapa
v
Toll Personnel Pty Limited
(U2018/6243)
COMMISSIONER CAMBRIDGE |
SYDNEY, 16 OCTOBER 2018 |
Application for unfair dismissal remedy - jurisdictional objection - ss. 382, 383 and 384 - minimum employment period - period of continuous service - transferring employee - s. 311 - when does a transfer of business occur - new employer or an associated entity ceases to outsource work to old employer - jurisdictional objection dismissed.
[1] This matter involves an application for unfair dismissal remedy made pursuant to section 394 of the Fair Work Act 2009, (the Act). The application was made by HR Experts (HR Experts) as agents acting on behalf of Ricky Taulapapa (the applicant), and the respondent employer has been identified as Toll Personnel Pty Limited trading as Toll People. In this Decision the respondent employer may be referred to as either; “the employer” or “the respondent” or “the new employer” or “Toll Personnel” or “Toll People”.
[2] The application was lodged with the Fair Work Commission (the Commission) at Sydney on 15 June 2018. The application nominated that the date that the applicant’s dismissal took effect was 13 June 2018. Consequently, the application was made within the 21 day time limit prescribed by subsection 394 (2) of the Act.
[3] Conciliation of the claim was unsuccessful. The employer pressed two jurisdictional objections raised against the application, namely, that the applicant had not been dismissed (the no dismissal objection), and secondly, that the applicant’s employment did not meet the minimum employment period (the minimum employment objection). In respect to the minimum employment objection, the employer stated that the applicant had commenced employment on 3 April 2018. Therefore, any purported dismissal of the applicant on or around 13 June 2018, meant that the period of employment of the applicant could not have been at least the 6 months minimum stipulated by ss. 382 and 383 of the Act.
[4] On 26 July 2018, Dean DP wrote to the applicant and directed that he provide a statement, with any documents or evidence to support the claim that he had served the minimum employment period. On 31 July 2018, HR Experts provided the chambers of Dean DP with, inter alia, a statement of the applicant which advised, in summary, that the employment of the applicant involved circumstances whereby a transfer of business had occurred such that the applicant’s period of employment did meet the minimum employment period.
[5] The employer maintained its jurisdictional objections, and subsequently the minimum employment objection has been allocated for determination by the Commission as presently constituted. The Commission issued Directions that included a timetable for the Parties to provide evidence, submissions and any other material in support of their respective positions on the minimum employment objection. The Parties have also confirmed their consent for the Commission to determine the minimum employment objection upon the filed documentary material and without the requirement for a Hearing.
[6] The key factual elements of the employment of the applicant, including the chronology of events relevant to the minimum employment objection, were not matters of any significant contest.
[7] In April 2016, the applicant commenced work with Staff Australia Pty Ltd who shall be referred to as “Staff Australia” or “the old employer”. Staff Australia is a labour hire provider and up until 13 March 2017, it provided labour, including the applicant, to work at the warehouse of Asahi Beverages (Australia) Pty Ltd (Asahi) located in the Sydney suburb of Prospect. The applicant worked for Staff Australia at the Asahi Prospect site as a so-called casual labour hire employee, engaged on a regular and systematic basis.
[8] In January 2017, Toll Transport Pty Limited (Toll Transport) was engaged under a contract with Asahi to provide warehousing services at the Asahi Prospect site. Toll Transport and the employer are associated entities as they are both wholly owned subsidiaries of Toll Holdings Limited (Toll Group).
[9] On 13 March 2017, Toll Transport commenced to operate the warehousing services at the Asahi Prospect site. However, at this time, Toll Transport undertook the warehousing services operations without directly engaging any employees, and instead it continued to utilise the labour hire employees who had previously been supplied to the Asahi Prospect site by inter alia, Staff Australia, including the applicant as an employee of Staff Australia.
[10] On 30 August 2017, the Commission approved the Toll Customised Solutions (Prospect) Enterprise Agreement 2017 (the EA). Toll Transport trading as Toll Customised Solutions is the employer Party bound by the EA which operates in respect to the Asahi Prospect site. The EA commenced to operate from 6 September 2017.
[11] From about 25 September 2017, Toll Transport started to utilise employees of the employer in addition to the labour hire employees, including the applicant, who continued to undertake the warehousing duties at the Asahi Prospect site. In October 2017, Toll Transport directly hired seven full-time employees to undertake work in respect of the Asahi Prospect site. Consequently, at this time, towards the end of 2017, the warehousing work at the Asahi Prospect site which was undertaken on behalf of Asahi by Toll Transport, was performed by a combination of employees of; Staff Australia; the employer; and directly hired employees of Toll Transport.
[12] In January 2018, Toll Transport commenced a process that involved the increased utilisation of employees of the employer rather than the continued utilisation of employees of Staff Australia. As part of this process, the employer offered employment to various employees of Staff Australia who had been working at the Asahi Prospect site.
[13] On 3 February 2018, the applicant completed a candidate registration form as part of the process for what was referred to as a transitioning of the supply of temporary labour from Staff Australia to Toll People. On 3 April 2018, the applicant commenced employment with the employer in a position described as Team Member at the Asahi Warehouse. The applicant was not provided with any written advice that his period of employment with Staff Australia would not be recognised by the employer.
[14] On 29 May 2018, Toll Transport informed the employer that the applicant had been removed from the Asahi Warehouse as a disciplinary measure arising from alleged breaches of certain timekeeping requirements. On 14 June 2018, HR experts, acting on behalf of the applicant, provided the employer with a letter described as the applicant’s involuntary resignation.
[15] Consequently, the factual chronology has identified that the essential issue for determination in respect of the minimum employment objection is whether the applicant’s period of employment with Staff Australia should be recognised for the purposes of the minimum employment period stipulated by ss. 382 and 383 of the Act.
[16] The employer provided submissions which asserted that the applicant’s period of employment with Staff Australia should not be recognised for the purposes of calculation of the minimum employment period contemplated by ss. 382, 383 and 384 of the Act. The employer submitted that the applicant had been employed by the respondent from 3 April 2018, to the date he alleged that he was dismissed, being 13 June 2018, which was a period of under three months. Therefore, according to the submissions made by the employer, the applicant was not a person protected from unfair dismissal as he had not completed at least the minimum period of employment as required by subsection 382 (a) of the Act.
[17] The submissions made by the employer acknowledged that the applicant had asserted that his period of service with his previous employer, Staff Australia, counted as service with the employer, as a result of a transfer of business pursuant to s. 311 of the Act. Specifically, the employer recognised that the applicant sought to rely upon subsection 311 (5) of the Act in order to establish that there was a connection between Staff Australia and the employer. The employer made submissions which rejected this proposition.
[18] The employer made submissions which recognised that the applicant had established the first three requirements contained in subsection 311 (1) of the Act. The employer did not dispute that the applicant’s employment with Staff Australia was terminated, and, that within three months after the termination the applicant became employed by the employer, and the work that the applicant performed for the employer was the same as the work he performed for Staff Australia. However, the employer submitted that there was not a transfer of business from Staff Australia to the employer as alleged by the applicant because the fourth requirement of subsection 311 (1), being that there was a connection between Staff Australia and the employer, could not be satisfied.
[19] The employer made submissions which asserted that the provisions of subsection 311 (5) of the Act could not be met in the applicant’s circumstances because there was no basis to establish that the employer had ceased to outsource work to Staff Australia. The submissions made by the employer sought to rely upon the Decision in the case of Steve Cokuzovski v Yarra City Council T/A Yarra City Council 1(Yarra City). The employer submitted that the Decision in Yarra City made it clear that for there to be a ceasing of the outsourcing under s. 311 (5) of the Act, there first must be an outsourcing, and in this instance the employer had never outsourced a labour hire contract to Staff Australia.
[20] The employer submitted that the respondent, Toll People, had never had a labour hire contract with Asahi for the Prospect Warehouse prior to the date the applicant alleges that he was constructively dismissed. Further, the employer submitted that the respondent, Toll People had never outsourced its labour hire or work to Staff Australia and further the respondent, Toll People, never ceased to outsource work to Staff Australia.
[21] Consequently, it was submitted by the employer that the Commission could not be satisfied that there was a connection between the employer and Staff Australia. The employer submitted that in the absence of any connection between Staff Australia and the employer in satisfaction of the requirements of subsection 311 (5) of the Act, there was no transfer of business and therefore the applicant had not completed a period of employment with the employer of at least the minimum employment period. The employer submitted that the applicant was not a person protected from unfair dismissal and his application for unfair dismissal remedy should be dismissed.
[22] The submissions made on behalf of the applicant sought to address both of the jurisdictional objections raised by the employer, the no dismissal objection, and the minimum employment objection. The submissions for the applicant in respect of the minimum employment objection relevantly asserted that the applicant’s employment with the employer involved a transfer of business in accordance with the requirements of s. 311 of the Act.
[23] The applicant made submissions which acknowledged that as a casual employee he needed to satisfy the requirements of s. 384 (2) of the Act. In this regard, the applicant submitted that he was a casual employee engaged on a regular and systematic basis, and with a reasonable expectation of continuing employment. Further, the applicant said that he was a transferring employee in relation to a transfer of business from an old employer to a new employer and the new employer, which was not an associated entity of the old employer, had not informed the applicant in writing before the new employment started, that the period of service with the old employer would not be recognised.
[24] The applicant’s submissions focused upon the requirements of subsection 311 (5) of the Act which were said to be satisfied because; the respondent outsourced work to Staff Australia who was the applicant’s former employer, the respondent ceased to outsource the work to Staff Australia and the applicant continued to do the same or substantially similar work to that which he had performed at Staff Australia. The applicant also submitted that the respondent had a labour hire contract with Asahi, and the respondent outsourced its labour hire to Staff Australia, and that outsourcing ended, and staff of Staff Australia, who were working on the Asahi contract, were led to believe and did in fact, transition to employment with the respondent.
[25] The applicant further submitted that the circumstances in this instance were very similar to the circumstances in the case of Burdziejko v ERGT Australia Pty Ltd 2 (ERGT), and in that case the Commission had accepted that there was the requisite connection between an old employer and a new employer such that there was a transfer of business in satisfaction of subsection 311 (5) of the Act. The applicant submitted that the transfer of business provisions in the Act were intended to have wider application than that provided for in the predecessor legislation, and this wider application was reflected in the Explanatory Memorandum.
[26] The submissions made by the applicant asserted that the jurisdictional objections raised by the employer should be rejected. In respect to the minimum employment objection, the applicant submitted that in the applicant’s circumstances, there was a transfer of business in satisfaction of s. 311 of the Act because, in particular, there was a connection between Staff Australia and the employer in satisfaction of the requirements of subsection 311 (5) of the Act.
[27] The consideration of the minimum employment objection raised by the employer in this instance has involved the assertion that the applicant was not a person protected from unfair dismissal because he had not completed a period of employment with the employer of at least the minimum employment period. This objection arises from the provisions of subsection 382 (a) of the Act which relevantly states:
“382 When a person is protected from unfair dismissal
A person is protected from unfair dismissal at a time if, at that time:
(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and ...”
[28] In this case the employer was not a small business employer and therefore pursuant to s. 383 of the Act, the relevant minimum employment period was 6 months. In any event, the period of employment of the applicant with the employer was a period of less than 3 months.
[29] Section 384 of the Act provides for a more detailed prescription of what does and what does not constitute a period of employment for the purposes of the minimum employment period. Section 384 of the Act is in the following terms:
(1) 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.
(2) 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; and
(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.”
[30] The evidence in this matter has established that the applicant was a casual employee engaged on a regular and systematic basis and he had a reasonable expectation of continuing employment. The regular and systematic employment of the applicant commenced in about April 2016 with the labour hire provider, Staff Australia. From at least May 2017, the applicant was engaged on a regular and systematic basis by Staff Australia at the Asahi Prospect site. On or about 3 April 2018, the applicant ceased employment with Staff Australia, and he then commenced employment with the employer. The applicant continued to perform the regular and systematic work at the Asahi Prospect site up until about 29 May 2018.
[31] Consequently, the evidence has established that the nature of the applicant's employment with both Staff Australia and then subsequently with the employer, satisfied the provisions of subsection 384 (2) (a) of the Act.
[32] The circumstances of this case involved the employment of the applicant with two different employers who were not associated entities. The applicant had been employed by the new employer for less than three months. Therefore, unless the previous employment with the old employer counted as a period of continuous service, the applicant would not have completed at least the minimum employment period. Subsection 384 (2) (b) of the Act establishes requirements that must be met if the period of employment with the old employer is to be counted towards the employee’s period of employment with the new employer.
[33] Subsection 384 (2) (b) of the Act introduces the notion of a “transferring employee in relation to a transfer of business” as contained in paragraph (i) of that subsection. Section 12, The Dictionary of the Act, provides for definitions of both a transferring employee and a transfer of business as follows:
“transferring employee, in relation to a transfer of business: see subsection 311(2).”
“transfer of business: see subsection 311(1).”
[34] Consequently s. 311 of the Act establishes the meaning of the terminology “transfer of business” and “transferring employee” as relevant in any application of subsection 384 (2) (b) of the Act. Section 311 of the Act is in the following terms:
“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;
(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).
Meaning of transferring employee
(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.
Transfer of assets from old employer to new employer
(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:
(a) the old employer or an associated entity of the old employer; and
(b) the new employer or an associated entity of the new employer;
the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):
(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and
(d) that relate to, or are used in connection with, the transferring work.
Old employer outsources work to new employer
(4) There is a connection between the old employer and the new employer if the transferring work is performed by one or more transferring employees, as employees of the new employer, because the old employer, or an associated entity of the old employer, has outsourced the transferring work to the new employer or an associated entity of the new employer.
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.
New employer is associated entity of old employer
(6) There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employed by the new employer.”
[35] In addressing the requirements of subsection 311 (1) of the Act the matters contained in paragraphs (a) to (d) therein must be satisfied in order to establish that there was a transfer of business. The facts in this case involved, (a) the termination of the applicant’s employment with Staff Australia and, (b) the commencement of employment with the employer within three months of the termination, and (c) the work the applicant performed for the employer was the same or substantially the same as that performed for Staff Australia.
[36] In order to satisfy paragraph (d) of subsection 311 (1) of the Act, the evidence would need to establish that there is a connection between the old employer and the new employer as described in any of subsections (3) to (6). In this instance the contest has been reduced to the question as to whether or not the terms of subsection (5) can be satisfied in respect to the new employer ceasing to outsource work to the old employer.
[37] Subsection 311 (5) of the Act deals with circumstances where a new employer ceases to outsource work to an old employer such that if such circumstances exists, there is established to be a connection between the old employer and the new employer. The operation of the terms of subsection 311 (5) has been examined in two particular Decisions of this Commission that have been previously mentioned, namely Yarra City and ERGT. As mentioned in both the Yarra City and ERGT Decisions, the Act does not provide any definition for the word “outsource” and the Macquarie dictionary definition of; “to contract (work) outside the company rather than employ more in-house staff” would appear to provide for the appropriate meaning to be given to the word “outsource” as it is to be applied in subsection 311 (5) of the Act.
[38] Further, as was recognised in both the Yarra City and ERGT Decisions, the transfer of business provisions in the Act are to be “broadly interpreted” and are not intended to “focus on whether the new employer had taken over the 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.” In this regard, it is relevant to reproduce that part of the Explanatory Memorandum that dealt with what has become subsection 311 (5) of the Act wherein it is stated:
“1226. The intention of this subclause is that a transfer of business occurs where a new employer decides to in-source the work previously done by the transferring employee of the old employer.” 3 [emphasis added]
[39] Consequently, any application of the provisions of subclause 311 (5) of the Act should focus upon the work done by the transferring employee rather than any broader contemplation of outsourcing any particular business activity or functions. Thus, with due respect to the conclusions that were reached in the Decision in Yarra City, the fact that the new employer may not have in-sourced all of the transferring work and retained a mixture of direct hire and labour hire personnel, should not be interpreted to mean that the employer had not ceased to outsource the work. Rather, the test to be applied is whether the work of the transferring employee had ceased to be outsourced, (aka in-sourced).
[40] Further, it is important to recognise that the protection from unfair dismissal provisions of the Act are beneficial legislation, and the minimum employment period establishes a qualification for access to the beneficial legislation. Subsection 384 (2) of the Act is clearly intended to ensure that casual employees who work on a regular and systematic basis and who are transferred to employment with a new employer are not denied access to the beneficial legislation unless the new employer informs them in writing that their period of service with the old employer would not be recognised.
[41] Employees may often have little knowledge of the details that might surround any transfer of business. The experience for an employee such as the applicant in this case, is that on the next regular day of employment he arrived at work and performed the same work that he had undertaken on a regular and systematic basis since about at least May 2017. When, on 3 April 2018, the applicant transferred from employment with Staff Australia to Toll Personnel, the only change to his employment circumstances that the applicant would have been able to identify would have been the provision of pay advice from Toll Personnel rather than Staff Australia. This change would have also been reflected by the invoicing in respect of the work of the applicant from 3 April 2018 onwards being provided to Toll Transport from Toll Personnel rather than from Staff Australia.
[42] Even in circumstances which unquestionably involve a transferring employee in relation to a transfer of business, subsection 384(2) (b) (iii) provides the new employer with the capacity to ensure that the period of service with the old employer would not be recognised. Consequently, the legislative emphasis is upon the provision of information to the employee who, as a consequence of the change in employment, loses access to the beneficial legislation. In circumstances where the new employer fails to provide information, it would seem that the employee should generally be entitled to believe that they had not lost any service based entitlements such as access to the beneficial legislation providing for remedy for unfair dismissal.
[43] Consequently, in this context, the particular circumstances of the applicant can be translated (and inserted) into the particular provisions of subsection 311 (5) of the Act as follows:
(5) There is a connection between the old employer (Staff Australia) and the new employer (Toll Personnel) if:
(a) the transferring work had been performed by one or more transferring employees (the applicant), as employees (an employee) of the old employer (Staff Australia), because the new employer (Toll Personnel), or an associated entity of the new employer (Toll Transport), had outsourced the transferring work to the old employer (Staff Australia) or an associated entity of the old employer; and
(b) the transferring work is performed by those transferring employees (the applicant), as employees (an employee) of the new employer (Toll Personnel), because the new employer (Toll Personnel), or the associated entity of the new employer (Toll Transport), has ceased to outsource the work to the old employer (Staff Australia) or the associated entity of the old employer.
[44] The application of the relevant circumstances in this instance to the terms of subsection 311 (5) of the Act, reveals the reliance upon and significance of the connection between the associated entities of Toll Transport and Toll Personnel. The resultant position can be alternatively expressed as follows: On 13 March 2017, when Toll Transport commenced to undertake the Asahi Prospect warehouse operations, it initially outsourced the labour requirements to, inter alia, Staff Australia (the old employer). Subsequently, on 3 April 2018, when the applicant commenced employment with Toll Personnel (the new employer), an associated entity of the new employer (Toll Personnel), namely Toll Transport, ceased to outsource the work to Staff Australia.
[45] Thus, the circumstances of the applicant in this instance satisfy the provisions of subsection 311 (5) of the Act. There is a connection between the old employer (Staff Australia) and the new employer (Toll Personnel) primarily because an associated entity of the new employer (Toll Transport) ceased to outsource the work to the old employer (Staff Australia).
[46] The determination of the minimum employment objection raised in this matter has involved a contest about whether or not the applicant was a person protected from unfair dismissal. The absence of any such protection was asserted to have occurred because the previous employment of the applicant with another employer should not count as service for the purposes of the minimum employment period established under ss. 382, 383 and 384 of the Act.
[47] The determination of the minimum employment objection has required an application of the terms of subsection 311 (5) of the Act so as to establish whether there was a connection between the old employer (Staff Australia) and the new employer (Toll Personnel) involving the new employer or an associated entity of the new employer (Toll Transport), ceasing to outsource work to the old employer.
[48] Upon analysis, the Commission has concluded that there is a connection between the old employer (Staff Australia) and the new employer (Toll Personnel) in satisfaction of the requirements of subsection 311 (5) of the Act. This connection has been established as a result of the transferring work of the applicant having been performed by the old employer (Staff Australia) because it had been outsourced by an associated entity of the new employer (Toll Transport) and subsequently the transferring work of the applicant was performed by him as an employee of the new employer (Toll Personnel) because the associated entity of the new employer (Toll Transport) ceased to outsource the work to the old employer (Staff Australia).
[49] Consequently the applicant had completed the minimum employment period and is a person protected from unfair dismissal. The minimum employment objection of the employer is dismissed.
[50] The matter will be listed for Mention and Directions proceedings at 2:00 pm on 22 October 2018.
COMMISSIONER
Final written submissions:
Employer: 3 September 2018 and 27 September 2018.
Applicant: 20 September 2018.
Printed by authority of the Commonwealth Government Printer
<PR701146>
1 Steve Cokuzovski v Yarra City Council T/A Yarra City Council [2018] FWC 155.
2 Nicole Burdziejko v ERGT Australia Pty Ltd [2015] FWC 2308.
3 Fair Work Bill 2008 Explanatory Memorandum @ paragraph 1226.