Protection from unfair dismissal; transfer of employment

In this unfair dismissal case in the Fair Work Commission, one of the legal issues was whether the employee’s previous service with another company should be counted as service with the employer which dismissed him as “continuous service” and thus counted towards qualifying for protection from unfair dismissal.

Here is the relevant extract.

“Minimum employment period

[51] It was not in dispute, and I find that the Respondent is not a small business employer, employing 26 staff at the time of the Applicant’s dismissal. It follows therefore that the Applicant must have served at least the minimum employment period of 6 months which applies. The Applicant commenced employment with the Respondent on 1 June 2021 however contends that his prior service with Proficient Health Care since July 2018, should be counted as service due to there having been a transfer of business from Proficient Health Care to the Respondent on 1 June 2021.

[52] Section 384(1) of the Act defines the meaning of period of employment of an employee’s period of employment with an employer at a particular time as “the period of continuous service the employee has completed at that time as an employee”.

[53] Section 22 of the Act defines service and continuous service. Relevantly, service with one employer may count towards service with another employer so long as the requirements of ss.22(5) and (7) are met. Those sections provide as follows;

“………………

(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.

……………….

(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.” (Emphasis added)

[54] The Applicant’s service with Proficient Health Care will count towards his service with the Respondent if it is established that he was a transferring employee in relation to a transfer of business. In establishing whether the Applicant was a transferring employee in relation to a transfer of business between Proficient Health Care and the Respondent it is necessary for the requirements of s.311 to be met. Relevantly to the present matter, s.311 provides as follows;

“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).

………………….

(4) 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.

……………………”

[55] The Respondent states and I accept that it is not an associated entity of Proficient Health Care. Therefore, it follows from the above that the Applicant’s service with Proficient Health Care will count towards his period of employment with the Respondent subject to the following requirements being met;

(i) the Applicant’s service with Proficient Health Care was terminated;

(ii) he commenced employment with the Respondent within 3 months of the termination of his employment by Proficient Health Care;

(iii) he performed work for the Respondent that was the same or substantially the same as the work he performed for Proficient Health Care; and

(iv) the Respondent entered into an arrangement with Proficient Health Care and that it now owns or has the beneficial use of the assets formerly owned or used by Proficient Health Care that relates to the transferring work.

[56] It is not in dispute that the Applicant’s employment with Proficient Health Care was terminated on 30 May 2021, that he commenced employment immediately with the Respondent on 1 June 2021 and that the Respondent purchased the Adare SRS facility from Proficient Health Care. Thus, the requirements of ss.311(a), (b) and (d) are met. However, the Respondent disputes that the Applicant was employed in the same or substantially the same role. I now turn to consider the nature of the role performed by the Applicant for the Respondent and whether it is the same or substantially the same as that performed by him for Proficient Health Care.

[57] The Applicant says the Manager role he held prior to 1 June 2021 was the same or substantially the same as the General Manager role he held following the Respondent taking over the Adare SRS facility on 1 June 2021 whereas the Respondent submits the roles are very different with the General Manager role being a much bigger role.

[58] While the Applicant’s case is not assisted by the absence of an employment contract or any other formal document that confirms that he was appointed to the Manager role by Proficient Health Care, there is however evidence that after the resignation of the former Manager, Chrystal Mak, the Applicant assumed the Manager role. This can be seen by the roster which identifies the Applicant as Manager, the increase in hourly rate from $29.72 to $33.00 that he received in assuming the Manager role and evidence from both the Applicant’s and Respondent’s witnesses which supports a conclusion that he held the Manager role.

[59] As to the duties of the Manager role, the Applicant seeks to rely on the Position Description dated 26 August 2021 which purports to be the Position Description for the former Manager role. Significantly, it is identical to the duties and responsibilities found in the Employment Agreement for the General Manager role. It was however prepared after he had ceased to hold the Manager role and following his receipt of the General Manager Employment Agreement from Ms Lin. Tellingly, the signatory of the Manager Position Description, Jinson Thomas was not called by the Applicant to give evidence.

[60] The Applicant’s evidence as to the Manager Position Description being an authentic document and an accurate reflection of his duties as Manager was unconvincing. It was prepared ‘after the event’ and was in identical terms to the responsibilities set out in the General Manager Employment Agreement he received from Ms Lin on 9 June 20211. His evidence that Ms Lin had merely reflected in the Employment Agreement his former Manager responsibilities as he had outlined to her, was also not credible. That was due to his unfamiliarity with significant aspects of the roles as set out in both the Manager Position Description and General Manager Employment Agreement.

[61] I am compelled to conclude that the Manager Position Description was copied directly from the General Manager Employment Agreement long after the Applicant had ceased to hold the Manager position with Proficient Health Care. Furthermore, I am inclined to the view, that contrary to the Applicant’s evidence that the Position’s Description’s preparation arose from FWO advice, the Position Description was prepared by the Applicant for the singular purpose of supporting his case that the Manager and General Manager roles were the same.

[62] In the light of the foregoing, I place no weight on the Position Description for the Manager role. It is consequently necessary to consider the substance of the two roles held by the Applicant before and after the 1 June 2021 takeover of Adare SRS by the Respondent.

[63] The Respondent submits that in creating the General Manager position, it intended to establish a role of greater scope and responsibility for the Applicant than the previous Manager role. Beyond the responsibilities set out in the Employment Agreement there is no evidence that the Respondent made that clear to the Applicant. In fact, the evidence of the Applicant, which was not rebutted by Ms Lin, was that Ms Lin in their first meeting stated to the Applicant that his role would remain the same. Support for that position can be found in that the Applicant’s hourly rate of pay remained unchanged at $33.00 per hour. Had it been the intention of the Respondent to increase the size of the Applicant’s role, it certainly was not accompanied by recognition in the level of remuneration. It is also passing strange that the Respondent was prepared to offer the Applicant a much larger role without any apparent inquiries into the Applicant’s performance or competence. On the Respondent’s own evidence, it was only once they took over the facility that they became aware of the Applicant’s performance and conduct issues.

[64] As to the specific duties undertaken by the Applicant as Manager for Proficient Health Care, the Respondent has proffered limited evidence beyond complaints that the Applicant delegated certain duties in the Manager role for Proficient Health Care and that he was not competent to perform the General Manager role or the Manager role before that. Competence, conduct and performance of the Applicant is not relevant to the assessment of whether the roles were the same or substantially the same.

[65] I am satisfied on the evidence of the Applicant and other witnesses that the Applicant was responsible for the following as Manager for Proficient Health Care;

  • Managing daily operations of the facility;
  • Rostering of staff;
  • Recruitment and training;
  • Purchasing of food, groceries and medical supplies and equipment;
  • Supervision of staff across the facility;
  • Overseeing and assisting clinical assessments;
  • Attending public meetings to promote the facility;
  • Managing facility costs within specified expenditure constraints; and
  • Liaising with residents and families regarding facility services and treatment.

[66] There was no evidence that the Applicant in the Manager role was responsible for formulating, monitoring and managing against budget, that being a specific requirement of the General Manager role. His lack of knowledge in the area of budgets was apparent from his failure to recognise that the facility was struggling financially in 2021. There was also no evidence that he had taken any action in ‘developing and implementing growth strategies’ or handled ‘community outreach programs’ when in the Manager role. He also revealed uncertainty as to whether he had been responsible for supervising clerical and administrative staff. These were all identified requirements of the General Manager role.

[67] I accept that the General Manager role included additional responsibilities that had not been present in the Manager role. Specifically, the areas of budget formulation and management, marketing and community outreach. Those responsibilities were in addition to the core elements common to both the Manager and General Manager roles which are set out above at [65]. I am not persuaded that the additional responsibilities to which I have referred, fundamentally changed the role which was essentially one of running the facility. That the Respondent subsequently formed a view that the Applicant did not possess the skills and competence to perform the role effectively is beside the point. He was recruited by the Respondent to continue doing the ‘same job’ after 1 June 2021 with some additional duties. The Respondent did not increase his hourly rate of pay and did not explain to the Applicant that he was being recruited to fill a much larger substantive role.

[68] While the Respondent seeks to characterise the General Manager role as substantially different to the Manager role, I do not accept that characterisation. The roles in my view, while not the same because of the additional duties and responsibilities, were substantially the same. I am consequently satisfied that;

(1) The Applicant’s employment with Proficient Health Care was terminated on 30 May 2021;

(2) The Applicant commenced employment with the Respondent on 1 June 2021;

(3) The Applicant undertook substantially the same role with the Respondent as he had undertaken for Proficient Health Care; and

(4) The Respondent entered into an arrangement with Proficient Health Care such that it now owns or has the beneficial use of the assets formerly owned or used by Proficient Health Care that relates to the transferring work.

[69] It follows from the above that the Applicant’s period of service with the Respondent includes his prior service with Proficient Health Care. Taking into account both his prior service with Proficient Health Care of approximately 2 years and 11 months and his 3 months service with the Respondent, his total period of employment is approximately 3 years and 2 months. That period of employment comfortably exceeds the minimum employment period.

[70] I am therefore satisfied that, at the time of dismissal, the Applicant was an employee who had completed a period of employment with the Respondent of at least the minimum employment period of 6 months which applies.”

Zhang v Life Care (Vic) Residential Care Pty Ltd (2022) FWC 39 delivered 13 January 2022 per Masson DP