The law about transferring employee and minimum lengths of employment for protection from unfair dismissal is complex. Here it is explained.
“Section 382 of the Act sets out when a person is protected from unfair dismissal:
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
(b) one or more of the following apply:
(i) a modern award covers the person;
(ii) an enterprise agreement applies to the person in relation to the
employment;
(iii) the sum of the person’s annual rate of earnings, and such other
amounts (if any) worked out in relation to the person in accordance with
the regulations, is less than the high-income threshold.
[9] The only question is whether the Applicant completed the minimum employment
period. Sections 383 and 384 set out the meaning of ‘minimum employment period’ and the
method by which a period of employment is calculated.
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[10] The sections are expressed as follows:
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.
[11] Where there has been a transfer of business and the employee is a transferring employee
and the relevant entities are not associated entities, then a transfer of employment will have
occurred, pursuant to s 22(7)(b) of the Act.
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[12] Where there is a transfer of employment, s 22(5) creates a prima facie obligation on the
new employer to include the period of service with the old employer. Only when the criteria of
s 384(2)(b) are satisfied is that obligation extinguished.
[13] A proper construction of s 384(2)(b) requires consideration of whether:
- the employee is a transferring employee;
- there has been a transfer of business from an old employer to a new employer;
- the old and new employer were not associated entities at the time the employee became
employer by the new employer; and
- the employee was notified in writing that the previous period of service would not be
recognised.
[14] If all the above criteria required by s 384(2)(b) are satisfied, then the period of service
with the old employer does not contribute towards the employee’s period of employment with
the new employer.
[15] In constructing s384(2)(b) the phrases “transferring employee” and “transfer of
business” must be considered. They are contained in The Dictionary (s 12 of the Act) and
require reference to ss 311(2) and s 311(1), respectively:
transferring employee, in relation to a transfer of business: see subsection 311(2).
transfer of business: see subsection 311(1).
[16] Section 311 of the Act states:
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.
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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.”
Consideration
[17] In determining this application, I must ascertain the Applicant’s period of employment
with the Respondent. If the Applicant’s service with the old employer is included, then she will
satisfy the minimum employment period and will be protected from unfair dismissal. Section
384 sets out numerous criteria which I will consider in turn.
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- Section 384 (2)(a) – was the Applicant employed on a regular and systematic basis with
reasonable expectation of continuing employment.
[18] The Respondent states the Applicant was a casual employee for the 2.5 months she was
employed with the Respondent. The Respondent contests that the Applicant was not a regular
and systematic worker as she determined her hours worked which varied based on her personal
circumstances.
[19] On the Applicant’s payslips, the pay period from 30 August 2022 to 12 September 2022
states ‘Ritek Australia Pty Ltd’ with an annual salary of $75,000. The payslip containing the
pay period from 22 November 2022 to 5 December 2022 is identical, except that it states ‘Ritek
Technology Pty Ltd’. The rate of pay and the invoice are the same when the business was with
Ritek Australia Pty Ltd and when the business changed to Ritek Technology Pty Ltd during her
time of dismissal.
[20] I am satisfied that the Applicant was employed on a regular and systematic basis.
[21] Furthermore, the Applicant had a reasonable expectation of continuing employment
during the transition process. It appears that the Applicant was working in the Cooroy plant and
performing a variety of tasks and new management had asked her to transition out of some of
her existing roles so she could focus on drafting, a core skill she had performed previously. This
would indicate she had a reasonable expectation to continue employment with the Respondent
albeit with a specific focus upon drafting.
[22] I am also satisfied that the Applicant had a reasonable expectation of ongoing
employment.
- Section 384(2)(b)(i) – was the Applicant a transferring employee?
[23] In determining whether the Applicant was a transferring employee, there must be a
transfer of business per s311 of the Act. It is not contentious that the criteria set out in section
311(1)(a) and (b) have been met. There is contention between the parties regarding s311(1)(c)
regarding the Applicant’s new role with Ritek Technology compared to her existing role with
Ritek Australia.
[24] The Respondent states that the Applicant’s role had changed from drafting/scheduling
to logistics and material procurement when she was with Ritek Australia. However, the
Respondent required a transition of role back to drafting and scheduling to cope with the
workload, and that it was to be done over a 2-month period. The Applicant states that she was
doing both the drafting, scheduling and logistics, and that the logistics part of her roles would
be delegated to another staff member. The Applicant states the staff member was struggling
with the logistics aspect which left the position still requiring herself to be fully relied upon.
[25] In assessing whether the work the employee performs for the new employer is the same
or substantially the same as the work performed for the old employer, the Federal Court
decisions of Crown Sydney Gaming Pty Limited v United Workers Union [2022] FCA 97 by
Jagot J, and Community and Public Sector Union, NSW Branch v Northcott Supported Living
Limited [2021] FCA 8 by Katzmann J have provided the below principles:
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- the performance of the tasks comprising of the job1
; if the character of employment is
the same – meaning the substance of work rather than just the particular duties
themselves.
- Particular duties that may not be required or performed at any particular time would not
unduly interfere with the interests of employers in running their enterprises efficiently
would not change the substance of work.2
- the product or services of the company have not required the employee to significantly
retrain or upskill;
- “Employees are expected to adapt [themselves] to new methods and techniques
introduced in the course of employment.”3 However, it cannot be a completely different
kind of work.4
- the location where work is performed has no bearing upon the characterisation of work;5
[26] Although the Applicant had a larger focus on a different aspect of her role with Ritek
Technology compared to Ritek Australia, she was still undertaking aspects of her old role which
were of the same character with the new employer. The role which Ritek Technology provided
was an adaptation to business needs rather than requiring the Applicant to undertake a
completely different line of work.
[27] I am satisfied the Applicant is a transferring employee as defined by s 311(2).
- Section 384(2)(b)(i) – was there a transfer of business?
[28] A primary issue for determination is whether s 311(1)(d) has been satisfied, and
subsequently, whether there was a transfer of business pursuant to s 311(1). In order to
determine this, it is necessary to consider the provisions of ss 311(3) to (6) to ascertain if any
of them have been met. In this case, s 311(3) is the only potentially relevant subsection to
consider.
[29] In the current circumstances, where the new employer has purchased the business from
the old employer, there is clearly a transfer of assets. Therefore, s 311(1)(d) is satisfied and I
find there has been a transfer of business as defined by s 311(1).
[30] I am satisfied that both ss 384(2)(b)(i) and 22(7) are satisfied. There has been a transfer
of business and a transfer of employment under the Act.
- Section 384(2)(b)(ii) – were the old employer and new employer associated entities?
[31] There is no indication of control or significant influence between the entities as the old
employer Ritek Australia went into liquidation and is confirmed by ASIC through the Notice
of Appointment as Liquidator on 21 September 2022 and the Cooroy plant is now controlled
by Ritek Technology. Although Ritek Australia was likely to have been a part of a division of
the Ritek group, I am satisfied that there is no control or significant influence between the old
employer and new employer. Therefore, I am satisfied that that the old employer and the new
employer are not associated entities under s 50AAA of the Corporations Act 2001 (Cth).
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- Section 384(2)(b)(iii) – did the new employer inform the employee in writing before
employment commenced that the period of service with the old employer would not be
recognised?
[32] Section 384(2)(b)(iii) only requires the new employer to inform the employee in writing
before the new employment that their previous service would not be recognised. The Act does
not prescribe a criterion when determining if the employee acknowledges this fact, if it must be
specifically brought to their attention, or if they agree.
[33] In Gregory v Shaver Shop Pty Ltd [2016] FWC 1323, Gooley DP found that where there
is a transfer of business, the employer is obliged to make it clear to the transferring employee
whether service with the old employer will be recognised. Gooley DP states this is important
for two reasons. First, the employee will know that they will not be protected from unfair
dismissal for the qualifying period and second, it will assist the employee to determine if he or
she refuses the job offer whether he or she is entitled to redundancy pay. For these reasons the
written advice to employees should be clear.6
[34] The Applicant submits that she was not provided notice in writing that her previous
service with Ritek Australia would not be recognised, and the Respondent has not provided any
evidence which suggests that her period of service with the old employer would not be
recognised. I am not satisfied that the Respondent has complied with the obligation under s
384(2)(b)(iii).
- Sections 382(a) and 383(a) – was the Applicant a person protected from unfair
dismissal; did they satisfy the minimum employment period?
[35] By virtue of the operation of subsection 384(2)(b) of the Act, the Applicant’s period of
employment with the old employer is included as Ritek Technology Pty Ltd (the new
employer) failed to inform the Applicant that her period of service with Ritek Australia (the
olde employer) would not be recognised. Therefore, her previous employment with Ritek
Australia Pty Ltd should be recognised as a period of employment relevant to the minimum
employment period as prescribed by section 383 of the Act.
[36] The Applicant is a person protected from unfair dismissal and the jurisdictional
objection must be dismissed. The application will now be determined on its merits and my
Chambers will issue further directions.”
Extract from Buttenshaw v Ritek Technology [2023] FWC 885 delivered 14 April 2023- Lake DP