When does an employee’s service with one employer transfer to another?
An employee’s service with their old employer can count as service with a second employer provided there is a demonstrated transfer of employment.
If a transfer of employment occurs from one entity to another, the employee must meet specific criteria to ensure there is a recognised continuity in employment from the old entity to the new.
A recent decision handed down in the Fair Work Commission has highlighted some important distinctions to be made when considering whether or not a transfer of employment has occurred.
The Applicant in the matter was originally engaged by a labour provider named Airswift, and through the labour provider was offered an on-hired role (Customer Service Coordinator) with a specialist chemical company named Clariant.
The Commencement of the assignment was 16 May 2016. In July of the same year, the Applicant had discussions with the Clariant Head of Business Development regarding the possibility of taking on direct employment with Clariant. The role that was discussed was initially titled ‘Tank Manager’ however following on from further discussions between the parties the prospective role was renamed ‘Account Manager’ and the Applicant was to be offered a $10,000 increase in remuneration.
Clariant decided to engage the Applicant directly on 10 October 2016 in the role of Account Manager which she performed before her employment ceased on 06 April 2017. The Applicant did for a period of time perform both her ‘old’ and ‘new’ roles concurrently before Clariant once again sought Airswift to fill the Customer Service Coordinator role, at one point the Applicant assisted in training the Airswift employee who took over the Customer Service Coordinator role.
After the end of her employment, the Applicant filed an unfair dismissal claim where she claimed that her time with Airswift should be counted as service toward her time with Clariant under s.22(5) of the Fair Work Act. However in order for the Commission to find in favour of the employee there needed to be a transfer of employment that falls within the meaning of s.22(7)(b) of the act, given that the Applicant accepted that Airswift and Clariant are not associated entities.
Commissioner Platt, in determining the matter then referred to s.311(1) of the act as ultimately that section of the legislation would be the decisive factor as to whether the Applicant could claim that a transfer of business had taken affect.
If the Commission found that there was no transfer of business under s.311(1) of the Act then the unfair dismissal claim would have to be dismissed as the six month minimum employment period had not been met by the Applicant, and this is exactly what Clariant was arguing.
Under s.311(1) of the act there are four criteria that need to apply in order to successfully argue a transfer of business has occurred. It was clearly inarguable that the first two criteria had been met (employment with old employer had terminated and had begun work for new employer within 3 months of this) in the matter but Commissioner Platt rejected the notion(s) that the work performed by the Applicant was substantially the same role and that there was a connection between the old and new employer, therefore ss.311(1) (c) & (d) had not been met.
The Applicant had argued that the role had originally been outsourced from Clariant to the labour hire provider Airswift and then insourced back to Clariant so that the Applicant could move across and join Clariant in an ongoing, full-time capacity. However this was rejected by Commissioner Platt who observed that the role ultimately filled by the Applicant was in fact ‘awarded’ to Clariant by one of its own clients (Woodside) and that there was no connection between the old employer Airswift and the new employer Clariant with respect to this role. The Commissioner deemed that the basis of the offer of the role to the Applicant by Clariant was in anticipation of being awarded the role from Woodside.
Interestingly, despite the Applicant’s claims of the role being substantially the same as that which she performed for Airswift, the Applicant was still required to undertake training for the new role due to the increased responsibilities and requirements that the role entailed. This again helped the Commission consider whether the roles were substantially the same or not and without doubt contributed in assisting the formulation of the final judgement.
With these requirements not being met there could be no other conclusion to form other than a transfer of business not occurring and the end result for the Applicant meaning she had not met the minimum employment period for her time at Clariant to be able to file the unfair dismissal application.
This can be a complex issue to navigate, so we’ve put together a visual guide to assist understanding the legislative requirements on the topic below: