Service with labour hire company counts after a transfer of business

In brief

The Fair Work Commission (the FWC) has decided that an employee's service with a labour hire company will count as service with his new employer following a transfer of business.¹ Managing Associate Andrew Stirling and Associate Jessica McDonald report.

How does it affect you?

• If there is a transfer of business, an employee's service with the old employer will count as service with the new employer. There can be a transfer of business if the employee's work is transferred from a labour hire company to an associated entity of the host.
• New employers can avoid recognising a transferring employee's previous employment with a non-associated entity (eg the labour hire company), for the purposes of calculating annual leave, redundancy pay and unfair dismissal qualification, by informing the employee in writing before they commence employment.

Background

In April 2016, Staff Australia engaged Mr Taulapapa to work at a warehouse. In early 2017, Toll Transport was contracted to operate the warehouse. It continued to receive labour hire, including Mr Taulapapa, from Staff Australia.

In early 2018, Toll Transport ceased to outsource Mr Taulapapa's work to Staff Australia. Instead, he commenced employment with Toll Personnel (an associated entity of Toll Transport). Toll Personnel did not inform Mr Taulapapa in writing that the new employer would not recognise his service with Staff Australia.

In June 2018, Mr Taulapapa's employment came to an end and he filed an unfair dismissal claim.

The decision

Mr Taulapapa had less than six months' service with Toll Personnel. For him to be eligible to bring an unfair dismissal claim, his service with Staff Australia needed to count as service with Toll Personnel.

For this to be so, there needed to be a transfer of business between Staff Australia and Toll Personnel. Mr Taulapapa argued that there was a transfer of business, on the basis that Toll Personnel had ceased to outsource work to Staff Australia. Toll Personnel argued that it could not have ceased to outsource work to Staff Australia, as it had never outsourced work to Staff Australia.

In this case, it was significant that Toll Transport and Toll Personnel were associated entities. The FWC decided that, because Toll Transport was an associated entity of Toll Personnel, it was sufficient that Toll Transport ceased to outsource Mr Taulapapa's work to Staff Australia.

Since Mr Taulapapa's service with Staff Australia counted as service with Toll Personnel, he had sufficient service to bring an unfair dismissal claim.