Unfair dismissal and length of service

This extract from an unfair dismissal decision of the Fair Work Commission explains how to calculate length of service for the purposes of determining whether an employee is protected from unfair dismissal.”

“[37] As Saunders C (as he then was) observed in Harris v Laing O’Rourke Australia

Construction Pty Ltd:

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The relevant statutory regime may be summarised in the following way:

(a) An employee must have completed at least the minimum employment period to be

eligible to bring an unfair dismissal claim against their employer (ss.382, 390 & 396 of

the Act);

(b) For a person employed by a non-small business employer, the minimum employment

period is six months (s.383 of the Act) [For a person employed by a small business

employer, the minimum employment period is twelve months];

(c) An employee’s period of employment with an employer is the period of continuous

service the employee has completed with their employer (s.384(1) of the Act);

(d) A period of “service” by an employee with their employer is a period during which

the employee is employed by the employer, but does not include certain “excluded

periods” (ss.12 & 22 of the Act);

(e) The expression “continuous service” is not defined in the Act. The ordinary meaning

of “continuous service” is the period of unbroken service by an employee with an

employer. However, the ordinary meaning of “continuous service” is affected by s.22

(s.12 of the Act);

(f) An “excluded period” does not break an employee’s “continuous service” with their

employer, but does not count towards the length of the employee’s “continuous service”

(s.22(3) of the Act). “Excluded periods” include a period of unauthorised absence and a

period of unpaid leave or unpaid authorised absence, subject to certain exceptions

(s.22(2) of the Act);

(g) Subsections 22(5) and (7) of the Act alter the ordinary meaning of “continuous

service”. In effect, they deem service by an employee with one employer to be service

with another employer if there is a transfer of employment within the meaning of s.22(7)

of the Act. In addition, those provisions stipulate that, in the event of such a transfer of

employment, the period between the termination of employment with the first employer

and the commencement of employment with the second employer does not break the

employee’s “continuous service” with the second employer, but the “gap” does not count

towards the length of the employee’s “continuous service” with the second employer

(s.22(5)(b) of the Act); and

(h) In order for an employee’s service with a previous employer to be deemed to be part

of their “continuous service” with a subsequent employer as a result of a “transfer of

employment”, one of the following sets of conditions must be satisfied (s.22(7) of the Act):

• First, the first and second employers must be “associated entities” and the “gap” in

employment must not be more than three months; or

[2023] FWC 2712

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• Secondly, the first and second employers are not “associated entities” and the employee

is a “transferring employee” in relation to a “transfer of business” within the meaning

of s.311 of the Act.

It is plain from the references to a transfer of employment from the “first employer” to

the “second employer” in s.22(5) and (7) of the Act that the deeming provisions in those

sections do not apply unless the employee is employed by two different employers at two

different points in time. The Act does not deem or otherwise permit an employee whose

employment relationship with an employer comes to an end and is later re-employed by

the same employer to have their earlier period of service with the employer combined

with their later period of service as part of their “continuous service” with the same

employer. Put another way, a “gap” between periods of employment with the same

employer would not satisfy the ordinary meaning of “continuous service” because the

service is broken and there is nothing in s.22 or elsewhere in the Act to alter this outcome.

For those reasons, I agree with the conclusion reached in relation to this issue by

Commissioner Spencer in Voican v Monadelphous Engineering Pty Ltd at [64]-[69] and

Commissioner Roe in Tebble v Rizmas Pty Ltd at [6], but respectfully disagree with the

obiter remarks by Commissioner Cambridge in Kefer v Tattersall’s Holdings Pty Ltd at

[41]-[44].

[Footnotes omitted; Emphasis added]

[38] The determination of whether the Applicant served the minimum employment period of

12 months involves consideration of the work that resulted in the FY22 Payments, and there

are two bases upon which it may be put that that work is not counted as continuous service.

They are:

(a) That the work that resulted in the FY22 Payments was performed as a

Contractor, and not an employee; or

(b) That the work that resulted in the FY22 Payments was last performed on or about

24 April 2022, and there was a gap in service before the commencement of the

Employment Agreement on 1 July 2022.

[39] The Respondent confirmed in the Hearing that the basis of their objection was the first,

and not the second, of the above outlined objections.4

[40] The period of service that resulted in the FY22 Payments was not service, in particular

continuous service, as an employee. Firstly it was, as agreed, ad hoc, and the irregularity of the

FY22 Payments highlights an irregularity of work. Secondly, the usual documents provided at

the commencement of employment (the Tax File Number Declaration Form, Superannuation

Standard Choice Form, and the Fair Work Information Statement) were not provided until 1

July 2022 when the Employment Agreement commenced. Finally, the absence of taxation

deductions was indicative of a contractor relationship.

[41] While not pressed by the Respondent, I also consider that there was a gap in service, in

whatever form (employee or contractor), from around 24 April 2022 to 1 July 2022. While the

Applicant was careful to assert continuous employment so as to obtain jurisdiction,5

I note that

[2023] FWC 2712

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he accepted that the FY22 Payments would have been made after work had been performed for

the Respondent.6 Upon that concession, it is clear that no compensable work was performed for

over two months from 24 April to 1 July 2022.

[42] The date of dismissal was agreed to be 27 June 2023, the Respondent having availed

itself of the ability to terminate the Employment Agreement in lieu of notice pursuant to Clause

14.1 of that Employment Agreement. Accordingly, the employment period was approximately

three days less that the minimum required.

[43] Having not completed a period of employment with his employer of at least the

minimum employment period, the Applicant is not a person protected from unfair dismissal,

and the Respondent’s jurisdictional objection regarding minimum employment period is

upheld. For completeness, I will also consider the jurisdictional objection regarding genuine

redundancy.”

 

Wilson v Invest With Phoenix Pty Ltd [2023] FWC 2712 delivered 9 November 2023 per Cross DP