Note: An appeal pursuant to s.604 (C2012/5132) was lodged against this decision - refer to Full Bench decision dated 22 February 2013 [[2013] FWCFB 1198] for result of appeal.
[2012] FWA 6806 |
|
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Ms Vanessa Hillie
v
World Square Pub
(U2011/15092)
COMMISSIONER CAMBRIDGE |
SYDNEY, 10 AUGUST 2012 |
Unfair dismissal - 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 - what constitutes an arrangement between old and new 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 Vanessa Hillie (the applicant), and the respondent employer has been identified as John Lucas Hotel Management Services Pty Ltd (ABN: 93055535520) trading as World Square Pub (the employer) or (the new employer).
[2] The application was lodged at Sydney on 28 December 2011. The application nominated that the date that the applicant’s dismissal took effect was 16 December 2011. The employer initially contested the date of the applicant’s dismissal but subsequently withdrew any objection to the matter proceeding on the basis that it may have failed to meet the time limit prescribed by subsection 394 (2) of the Act.
[3] Conciliation of the claim was unsuccessful and the employer pressed a jurisdictional objection and sought to have that objection determined before any other proceedings were held. The jurisdictional objection that was raised by the employer contended that the applicant had not completed the minimum employment period at the date of the termination of employment.
[4] On 13 April 2012, the matter was listed for Conference/Hearing proceedings before Fair Work Australia (FWA). The Conference/Hearing was held to deal with the jurisdictional objection taken by the employer. On 13 April the applicant was represented by the Liquor & Hospitality Division of United Voice (United Voice), and the employer was represented by the Australian Hotels Association (NSW) (AHA). A number of difficulties arose in respect to the representation arrangements for the applicant. In due course, by way of written communication dated 17 May 2012, United Voice withdrew from any further involvement in the matter.
[5] Eventually the matter proceeded to Jurisdictional Conference/Hearing before FWA conducted in Sydney on 10 July 2012. At the Jurisdictional Hearing the employer was represented by Mr R Kakwani and Mr P Ryan from the AHA. Mr Kakwani advanced the case in support of the jurisdictional objection made by the employer. Mr Kakwani called Mr John Phillip Lucas to give evidence as a witness. Mr Lucas is the sole Director of the employer and he attested to the veracity of a statement 1 that he had made for the proceedings.
[6] The applicant appeared unrepresented and she gave evidence as a witness. The applicant sought to rely upon a statement 2 she had made and which had been filed on her behalf by United Voice.
Factual Background
[7] The key factual elements of the employment of the applicant including the chronology of events relevant to the jurisdictional objection were not contested.
[8] In July 2009, the applicant commenced work at the World Square Pub, (the hotel) which was managed and operated by a company called Wanslea Grove Pty Ltd (ABN: 007082546) (Wanslea Grove) or (the old employer). The applicant worked for Wanslea Grove in what was described as a casual position. The applicant’s casual employment at the hotel with Wanslea Grove was on a regular and systematic basis.
[9] The owners of the hotel are Brookfield WS Retail Landowner Pty Ltd (ACN: 109033794) and AWPF Management No.2 Pty Limited (ACN: 135365365) who together are referred to as the owners. In July 2011 a representative of the owners made contact with Mr Lucas, the employer. The owners informed Mr Lucas that the tenant of the hotel (Wanslea Grove) was in financial difficulty and may be evicted from the premises. The owners asked Mr Lucas if he would be prepared to run the hotel in the event that Wanslea Grove was evicted. Mr Lucas expressed an interest in managing the hotel on behalf of the owners.
[10] On 23 August 2011 a meeting was held between the owners, Wanslea Grove and the employer, Mr Lucas. At this meeting Wanslea Grove announced that it could no longer pay the rent for the hotel and it would vacate the premises on the following Monday, 29 August 2011. The owners accepted these circumstances and the employer asked Wanslea Grove to provide them with information including: a list of utility and inventory suppliers, a list of employees, and poker machine taxation information.
[11] On 25 August 2011, Wanslea Grove provided the employer with the information which had been requested at the meeting held on 23 August. The information included a list of the names and details of 7 employees one of whom was the applicant.
[12] On Friday 26 August 2011, Wanslea Grove abandoned the hotel. The “hand over” of the hotel from Wanslea Grove to the employer which had been planned for Monday 29 August, did not take place. Instead Mr Lucas had to contact the owners in order to obtain a key for entry to the hotel premises. The hotel did not open for operation on the weekend of 27 and 28 August, but it resumed partial operation in respect to the gaming facility on Monday 29 August.
[13] The applicant attended at the hotel on Monday 29 August and was employed by Mr Lucas, the employer, performing essentially the same work that she had undertaken in the previous weeks and months for Wanslea Grove. The applicant was not given any notification either verbally or in writing, that her previous period of employment with Wanslea Grove would not be recognised for any employment related purposes.
[14] Consequently the essential issue for determination is whether the applicant’s period of employment with Wanslea Grove should be recognised for the purposes of the minimum employment period.
The Employer’s Case in Support of the Jurisdictional Objection
[15] Mr Kakwani, who appeared on behalf of the employer, claimed that the applicant’s period of employment with Wanslea Grove, the old employer, should not be recognised for the purposes of calculation of the minimum employment period contemplated by sections 383 and 384 of the Act. Therefore according to Mr Kakwani, the applicant was not a person protected from unfair dismissal as she had not completed at least the minimum period of employment as required by subsection 382 (a) of the Act.
[16] The submissions made by Mr Kakwani relied strongly upon the Decision of Commissioner Bissett in the case of Peter Zabrdac v Transclean Facilities Pty Ltd (Zabrdac) 3 wherein it was held that the absence of an arrangement between the old and new employer broke the period of continuous service because there was no transfer of business as defined by section 311 of the Act.
[17] Mr Kakwani submitted that there was no arrangement between Wanslea Grove and the employer which would satisfy the notion of an arrangement for the purposes of sub-section 311 (3) of the Act. Mr Kakwani referred to the three requirements that had been identified by Commissioner Bissett in Zabrdac as being necessary to establish an arrangement, namely:
[18] Therefore according to the submissions of Mr Kakwani, there was not an arrangement between the old and new employer but instead an arrangement between the employer and the owners. Mr Kakwani said that any discussions and other communications between Wanslea Grove and Mr Lucas lacked the requisite “substance” as referred to in Zabrdac. Therefore according to Mr Kakwani there was no transfer of business between Wanslea Grove and the employer. Consequently the applicant’s period of employment with Wanslea Grove should not be recognised as a period of employment with the employer.
[19] Mr Kakwani said that he accepted that the employer had the beneficial use of some assets which were previously the assets of Wanslea Grove. However Mr Kakwani contended that the use of these assets was not in accordance with an arrangement between the old employer, Wanslea Grove, and the new employer. In particular Mr Kakwani submitted that any communications that occurred between Wanslea Grove and the employer including the provision of information did not result in any understanding or expectation relating to the transfer of assets from the old employer to the new employer.
[20] Mr Kakwani urged FWA to uphold the jurisdictional objection. He submitted that there was not an arrangement between the applicant’s old employer and the new employer in relation to the beneficial use of assets and therefore the provisions of sub-section 311 (3) were not met. Consequently, according to Mr Kakwani, there was not a transfer of business between the old employer and the new employer and as the applicant had not completed the minimum employment period with the employer the applicant was not a person protected from unfair dismissal. Mr Kakwani submitted that the application should be dismissed.
The Applicant’s Case in Opposition to the Jurisdictional Objection
[21] At the time that the jurisdictional objection was eventually heard, 10 July 2012, the applicant appeared without any representation. However, at an earlier time she was represented by United Voice.
[22] The applicant sought to rely upon the written submissions made by United Voice opposing the jurisdictional objection raised by the employer. These submissions were based upon an assertion that the employer had purchased the “business” conducted at the hotel.
[23] United Voice submitted that there was a connection between the old employer and the new employer due to there being a sale of the business including a transfer of assets from the old employer to the new employer. Further, as the 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, that period counted for the purposes of the minimum employment period as fixed by section 383 of the Act.
[24] During the Hearing of the jurisdictional objection the factual inaccuracy regarding the absence of any sale of business between the old and new employer was canvassed by FWA with the applicant. The applicant accepted that she may not have fully understood whatever arrangements had been made between the old employer and the new employer. The applicant reiterated that she had simply attended for work at the hotel on the Monday and without any advice to the contrary she continued to perform the same job for the new employer.
Consideration
[25] The consideration of the jurisdictional objection raised by the employer in this instance has involved the assertion that the applicant was not a person protected from unfair dismissal because she 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 ...”
[26] In this case the employer was a small business employer and therefore pursuant to section 383 of the Act, the relevant minimum employment period was 12 months. Ordinarily an employee working for a small business must complete a period of at least one year of employment before they become protected from unfair dismissal.
[27] However 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.”
[28] The evidence in this matter has established that the applicant was a casual employee engaged on a regular and systematic basis and she had a reasonable expectation of continuing employment. That regular and systematic employment commenced in about July 2009 with the company Wanslea Grove and continued until 26 August 2011.
[29] On Friday 26 August 2011, Wanslea Grove abandoned the hotel and as a consequence the employment of the applicant, and others, was terminated. On and from Monday 29 August 2011, until the applicant's dismissal on or around 16 December 2011, the applicant was a casual employee engaged on a regular and systematic basis with the employer and she had a reasonable expectation of continuing employment with the employer.
[30] Consequently the evidence has established that the nature of the applicant's employment with both Wanslea Grove and then subsequently with the employer, satisfied the provisions of subsection 384 (2) (a) of the Act.
[31] 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 four 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) fixes the relevant requirements.
[32] 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).”
[33] Consequently section 311 of the Act establishes the meaning of the terminology “transfer of business” and “transferring employee” as contained in 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.”
[34] 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 Wanslea Grove 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 Wanslea Grove.
[35] 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 whether or not the terms of subsection (3) can be satisfied in respect to the transfer of assets from the old employer to the new employer.
[36] Further refinement of the objection taken by the employer established that the new employer owned and obtained the beneficial use of some of the assets (tangible and intangible) that the old employer owned or had the beneficial use of, and these assets relate to and were used in connection with the transferring work.
[37] The remaining issue of contest has narrowed to the question of whether the transfer of assets was in accordance with an arrangement between the old and new employers. Thus the determination of the jurisdictional objection turns upon what constitutes an arrangement for the purposes of a transfer of assets as contemplated by subsection 311 (3) of the Act.
[38] This question was helpfully considered in some detail by Commissioner Bissett in the Zabrdac Decision which was referred to by the employer. In Zabrdac, Commissioner Bissett relevantly examined the Explanatory Memorandum to the Fair Work Bill 2009, the Macquarie Dictionary definition of “arrangement”, and numerous instances involving judicial consideration of the word “arrangement”, noting that most decided cases were made in the areas of trade practice and taxation.
[39] Commissioner Bissett then summarised her approach in the following paragraphs of Zabrdac:
“[74] These decisions provide authority for the proposition that an arrangement, whilst not necessarily legally enforceable, requires:
[75] An arrangement is not an expectation that the party will behave in a particular way and it cannot be contrived. It requires some substance.”
[40] I respectfully agree with the approach adopted by Commissioner Bissett. In addition, I believe that it is also relevant to have cognisance of the statutory context of the provisions of subsection 311 (3) as part of any consideration of whether the transfer of assets from an old employer to a new employer occurred in accordance with an “arrangement” between the two entities. I believe that the statutory context would provide for a broad interpretation to be given to the word “arrangement” as it appears in subsection 311 (3) of the Act.
[41] In my view 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.
[42] 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 she arrived at work to discover a different employer. Exactly how the change in employment came about may never be properly explained and in the absence of the provision of information to the contrary the employee would be entitled to believe that all her employment related entitlements had been carried over from the old employer.
[43] 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 term “arrangement” should be given a sufficiently broad meaning so that an employee should not easily lose access to the beneficial legislation.
[44] In the statutory context to which I have referred I now turn to the three elements identified in the Zabrdac Decision as providing the basis upon which to establish that an arrangement existed between Wanslea Grove and the employer.
[45] Firstly, there was clearly communication between Wanslea Grove and Mr Lucas during the meeting held on 23 August 2011, and following that meeting there were further communications including the provision of the requested information. Secondly, there was an explicit understanding that the employer would be taking over the operation of the hotel on Monday, 29 August 2011. There was also an expectation that Mr Pana from Wanslea Grove was going to hand over the keys to the hotel to Mr Lucas on Monday 29 August. 4 Although this did not eventuate because Wanslea Grove abandoned the hotel on the preceding Friday.
[46] It should be noted that these factual circumstances are significantly different to those identified in the Zabrdac Decision in particular I refer to paragraphs 81 and 82 of that Decision.
Conclusion
[47] The determination of the jurisdictional 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.
[48] The determination of the jurisdictional objection has turned upon an analysis of the meaning to be given to the word “arrangement” appearing in subsection 311(3) of the Act so as to establish whether the transfer of assets from the old employer to the new employer occurred in accordance with an arrangement between those two entities.
[49] I have adopted, with respect, an approach to the meaning to be given to the word “arrangement” as was articulated by Commissioner Bissett in the Zabrdac Decision. I have supplemented that approach with my own statutory context considerations. In conclusion I find that the evidence has established that there was an arrangement between the old employer and the new employer involving a transfer of assets as contemplated by subsection 311(3) of the Act. Therefore the applicant was a person who was a transferring employee in relation to a transfer of business from the old employer to the new employer.
[50] Consequently the applicant had completed the minimum employment period and is a person protected from unfair dismissal. The jurisdictional objection of the employer is dismissed.
[51] The matter will be re-listed for further proceedings by way of Directions scheduled for 10:00 am on 31 August 2012.
COMMISSIONER
Appearances:
Ms V Hillie appeared on her own behalf.
Mr R Kakwani, together with Mr P Ryan from AHA, appeared for the respondent.
Hearing details:
2012.
Sydney:
July, 10.
1 Exhibit 1.
2 Exhibit 2.
3 Peter Zabradac v Transclean Facilities Pty Ltd [2011] FWA 4492.
4 See transcript of proceedings (10 July 2011) at PN268 to PN270.
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