DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Mr Malcolm Watson
v
Oliver-Ramsay Group Pty Ltd
(U2014/14353)

Application for relief from unfair dismissal - Threshold jurisdictional issue to be determined - Whether applicant has satisfied minimum employment period - Fair Work Act - ss. 394, 382, 383, 384, 309, 310, 311 and 22.

Introduction

[1] This decision concerns an application by Mr Malcolm Watson for an unfair dismissal remedy under s.394 of the Fair Work Act 2009 (the Act). The application arises from the termination of Mr Watson’s employment with Oliver-Ramsay Group Pty Ltd (Oliver-Ramsay Group) at a meeting on 25 September 2014 and a letter of the same date. Oliver-Ramsay Group has objected to the application on the basis that Mr Watson’s continuous service at the time of the termination of his employment was less than the minimum period prescribed by the Act.

[2] As there are no contested facts to determine the parties have agreed that the matter could be dealt with on the papers and were given an opportunity to file written submissions in relation to the jurisdictional issue.

[3] Throughout these proceedings, Mr Watson has represented himself and Oliver-Ramsay Group has been represented by the Australian Security Industry Association Limited.

Background

[4] Oliver-Ramsay Group was successful in tendering for the provision of security services at the Federation University in Ballarat with effect from 1 July 2014. Prior to that date Mr Watson was employed by the previous contractor as a security guard at the University.

[5] By letter dated 25 June 2014 Mr Watson was offered employment with Oliver-Ramsay Group as a full time Security Officer to commence work on 30 June 2014. His first day of rostered work was 1 July 2014.

[6] In a letter dated 25 September 2014 Oliver-Ramsay Group advised Mr Watson that it had decided not to continue his employment beyond the probationary period. On termination he was paid a week’s pay in lieu of notice and outstanding entitlements.

[7] These dates are not disputed. However Mr Watson also contends that he had worked at the University doing the same job since September 2006.

The Legislative Test

[8] In accordance with s.382 of the Act a person is protected from unfair dismissal if the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period.

[9] The terms “minimum employment period” and “period of employment” are defined in ss. 383 and 384 of the Act. These sections provide:

“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.

384 Period of employment

(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.”

[10] There is no definition of “transferring employee” or “transmission of business” in the unfair dismissal provisions of the Act. Section 12 of the Act contains a reference to ss. 311, 768AD and 768AE with respect to these terms. Assuming that the relevant employers are national system employers, Part 2-8 of the Act contains the relevant provisions. Sections 309-311 within that Part of the Act provide:

“309 Object of this Part

The object of this Part is to provide a balance between:

(a) the protection of employees’ terms and conditions of employment under enterprise agreements, certain modern awards and certain other instruments; and

(b) the interests of employers in running their enterprises efficiently;

if there is a transfer of business from one employer to another employer.

Division 2—Transfer of instruments

310 Application of this Division

This Division provides for the transfer of rights and obligations under enterprise agreements, certain modern awards and certain other instruments if there is a transfer of business from an old employer to a new employer.

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.”

[11] There is a deeming provision in s.22 of the Act. It relevantly provides:

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.

……………..

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:

(a) 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

(b) 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.

(8) A transfer of employment:

(a) is a transfer of employment between associated entities if paragraph (7)(a) applies; and

(b) is a transfer of employment between non-associated entities if paragraph (7)(b) applies.

[12] Section 22 is the first relevant provision. It deems employment with a former employer to be service with a new employer in certain circumstances and thereby modifies the effect of s.384(1). In the absence of s.22 only service with the new employer can count for the purposes of the qualifying period of employment in s.382. In order for the deeming provision to apply, the circumstances in this matter need to match those described in ss. 22(7)(a) or 22(7)(b).

[13] Paragraph (a) only applies when the two employers are associated entities. There is no suggestion that this is the case here. The Oliver-Ramsay Group is not an associated entity of the previous contractor, D W Security.

[14] Paragraph (b) applies to a transferring employee in relation to a transfer of business. It is not clear that the definitions of these terms in Part 2-8 apply for the purposes of Part 3-2. The provisions appear in a part of the Act regarding the transmission of instruments. If they do not apply, a more general meaning of the terms may need to be applied.

[15] The circumstances involve the loss of a contract to a competitor contractor, and no transfer of assets from the former contractor to the new contractor. These circumstances do not fall within any of the requisite circumstances in sub-sections (3)-(6) of s.311 - the definition of a transfer of business. Regardless of whether the employer informed the employee in writing as provided for in s.384(2)(b), there is no basis to suggest that the service with the previous employer should be taken into account because there is no transfer of business.

[16] Because the context of s.311 is different to the unfair dismissal provisions of the Act, and it is not clear that the definitions for the purposes of various instruments extends to the interpretation of other provisions of the Act, it is necessary to consider the meaning of the term “transfer of business” independently of the definition in s.311. The general notion of a transmission of business has been dealt with by the High Court in relation to the broader description of whether an employer is a “successor, assignee or transmittee (whether immediate or not) to or of the business or part of the business of an employer who was a party to the industrial dispute, including a corporation that has acquired or taken over the business or part of the business of the employer” in s.149 of the Workplace Relations Act 1996. In that regard the High Court has said: 1

“As a general rule, the question whether a non-government employer who has taken over the commercial activities of another non-government employer has succeeded to the business or part of the business of that other employer will require the identification or characterisation of the business or the relevant part of the business of the first employer, as a first step. The second step is the identification of the character of the transferred business activities in the hands of the new employer. The final step is to compare the two. If, in substance, they bear the same character, then it will usually be the case that the new employer has succeeded to the business or part of the business of the previous employer.”

[17] However in my view, the concept of a “transfer of business” in s.22(7) is narrower than the concept of a “successor, etc to a business” in s.149. The former describes a process that implies a transaction between two entities. The latter describes the net effect of events. As the High Court made clear in Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd, the latter concept does not necessarily depend on a transaction between the parties. Gleeson CJ, Hayne, Callinan and Heydon JJ said (at [37-38]): 2

“The "business" of an employer may be described in a number of ways. In many contexts it will suffice to describe the kind of activity conducted. A description like "manufacturing", "retailing" or the like may do. In other contexts more detail may be necessary, as, for example, "window frame manufacturing" or "toy retailing". In s 149(1)(d), however, more and different detail is necessary in order to decide whether one employer is the successor to or of the "business" or part of the "business" of another. So much follows inevitably from the need to consider whether the new employer is a successor to a part of the former employer's business. But more fundamentally than that, it follows from the fact that s 149(1)(d) focuses upon succession, assignment and transmission to or of a business which is identified as the business of an employer. That necessarily directs attention to what it is that the former employer had which is to be described as the "business" of that employer.

In many cases the answer to the questions just presented will be provided by looking at some transaction between the two employers. Where there has been some transaction between them, it will be possible to see whether the former employer transferred the whole, or part, of its business to the new employer. But in other cases there may be no transaction between the former employer and the employer alleged to be its successor. So, for example, in cases of inheritance between natural persons, there may be no transaction between the two employers but it may be clear that the new employer is the successor of the business of the former employer. Thus, the existence of some transaction between the two employers is not essential in order to show that one is the successor to the business of the other. Further, whether or not there was some transaction between the new employer and the former employer, there may be a real question about whether what the new employer enjoys is the whole or a part of the "business" of the former employer.”

[18] The definition of transfer of business in s.311 requires a connection between the employers of a requisite kind. If that definition does not apply, I am nevertheless of the view that the general notion of a transfer of business involves a similar type of connection or transaction between the two employers. There is no such connection present in this case. It follows that these circumstances do not involve a transfer of business.

Conclusions

[19] The relevant facts are not contested in this case. However the provisions of the Act regarding periods of employment are somewhat confusing and it is necessary to consider various parts of the Act to discern the proper application of the Act. It is sufficient in this case to note that unless the two employers are associated entities, or a transmission of business occurs, the relevant period of employment for the purposes of the qualifying minimum period of employment is the period of continuous service the employee has completed with the current employer as an employee. This period is less than the qualifying period referred to in s.383.

[20] The two employers are not associated entities. Further, there is no transmission of business between the previous security contractor at the University and the Oliver-Ramsay Group. Mr Watson’s period of service with the Oliver-Ramsay Group was approximately 3 months. The minimum period of employment in his case is six months. Consequently Mr Watson is not protected from unfair dismissal under the Act and his application must be dismissed. An order to this effect is issued in conjunction with this decision (PR559900).

VICE PRESIDENT WATSON

Final written submissions:

Malcolm Watson on 15 December 2014.

Oliver-Ramsay Group Pty Ltd on 19 December 2014.

 1   PP Consultants Pty Ltd v Finance Sector Union [2000] HCA 59; (16 November 2000) per Gleeson CJ, Gaudron, McHugh and Gummow JJ at [15].

 2   (2005) 138 IR 252.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR559899>