Qualifying periods of employment begin again after transmission of business

by HCA06 Mar 2007

The AIRC has recently held that the six-month qualifying period of employment, set by the Workplace Relations Act, commences again upon transfer of employment as a result of transmission of business, unless there is an express agreement to the contrary. Employees within a qualifying period are unable to prosecute unfair dismissal claims under the Act.

A security guard had his employment terminated approximately seven weeks after transferring to a new employer as a result of an outsourcing arrangement. As part of the arrangement, the new employer agreed to maintain the employee’s sick and annual leave, and to recognise past service for the calculation of long service leave. No agreement was reached to shorten the qualifying period.

The guard lodged an unfair dismissal claim. The new employer alleged the guard was within a probationary period and/or qualifying period and therefore was unable to bring the claim. The case considered whether the guard’s service with the previous employer continued with the new employer.

SDP Richards held the original employment contract ended and a new contract commenced with the new employer. He found the maintenance of sick and annual leave, and the recognition of past service for long service leave, were conditions of the offer of employment with the new employer. They did not cause the prior contract “to be handed over unbroken to the new employer, such that the employee is taken to have been an employee of the new employer retrospectively from the date of employment with the prior employer”.

SDP Richards did not have to determine whether a probationary period was agreed in advance, as the qualifying period applied – having not been shortened or waived, by written agreement, before the commencement of employment.

HR tips: The case confirms a transferred employee, dismissed within a qualifying or probationary period, is unable to prosecute an unfair dismissal claim. However, prospective employers should still consider: whether there is an award or workplace agreement, binding on the transferring employee, which provides for continuity of service; and the operation of the Australian Fair Pay and Conditions Standard. Successor employers may be requested by transferring employees to waive any qualifying period and to agree to continuity of service for the purpose of calculating all entitlements.

Time limit for termination claims commences on communication of termination

An unfair or unlawful termination claim usually must be lodged within 21 days of the termination of employment. A recent case illustrates that in some instances the date of termination may be uncertain.

A longstanding employee of Baptist Community Services (BCS) was granted leave from 12 May to 30 June 2006. Whilst on leave the employee travelled to Tanzania, where she fell ill and was unable to return to Australia.

BCS was aware the employee had travelled overseas and that her home address appeared to be uninhabited. On 29 June, BCS was notified by text from the employee’s father that she was not well and was unable to return to work. BCS was unable to contact the employee’s father. The employee did not contact BCS.

On 5 July, BCS wrote to the employee’s home address requiring her to contact named managers, or it would consider that she had abandoned her employment. On 13 July, having received no response, BCS sent a further letter, purporting to terminate the employment that day.

The employee returned to Sydney on 22 August. She lodged an application with the AIRC on 12 September – within 21 days after actual receipt of the two letters, but 61 days after the date specified by BCS. DP Cartwright refused an extension of time.

On appeal, the Full Bench found the employee was not aware of the termination until her return to Australia. The Act requires an application to be lodged within 21 days of “the date on which the termination took effect”. The Bench held that termination of employment normally would not take effect until it was communicated. However, the Bench added that, in cases in which abandonment of employment is alleged, the time at which the termination took effect may only be ascertainable after resolving factual and legal issues at the hearing.

The Bench allowed the appeal, noting that, on the view above, the application was within time.

HR tips: Where abandonment of employment arises, employers should: take all reasonably practicable steps to communicate with the employee; be aware that the date on which the termination of employment takes effect may not be clear cut and may only be determined following a hearing; and seek legal advice.

By Richard Taylor, senior associate, Australian Business Lawyers. Email: richard.taylor@ablawyers.com.au



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