Does an employer's 'share of sales' change the employment relationship?

Fair Work examines dismissal claim to determine 'true employer'

Does an employer's 'share of sales' change the employment relationship?

The Fair Work Commission (FWC) recently dealt with a dispute relating to the alleged dismissal of a worker on December 5, 2023. The worker filed an application under s.365 of the Fair Work Act 2009 (the Act) against his former employer, PPG Industries Australia Pty Ltd (PPG).

The case took an unexpected turn when the employer raised jurisdictional objections, claiming that the worker was not their employee at the time of the dismissal.

The FWC had to navigate through a web of corporate relationships and share transfers to determine the true identity of the worker's employer. The decision sheds light on the importance of clear employment contracts and the potential pitfalls of corporate restructuring.

Worker's employment contract with PPG

The worker started his employment on October 9, 2023, and entered into a standard form contract used by PPG across all its business units.

According to records, the correspondence between the worker and PPG clearly stated:

"Thank you for choosing PPG. I am pleased to confirm our offer of employment to you for the position of Inventory Controller, Traffic Solutions, commencing on October 9 2023. Please find enclosed your Employment Contract, which outlines the terms and conditions of your employment. I look forward to you joining the PPG team and wish you well in your new role."

The employment contract also referred to PPG as the employer, with numerous references to 'PPG' or 'the Company' throughout the document.

Despite PPG's claims that the references to PPG as the employer were an error, the FWC concluded that the employment contract was the best evidence of the initial employing entity.

The sale of shares

The FWC noted that the evidence regarding the worker's employer on and after October 17, 2023, was less clear.

The worker submitted that on this date, PPG 'sold business' to a different entity, Geveko. However, PPG's evidence suggested that there was a transfer of share ownership from a PPG-related entity to Geveko, rather than a sale of the business and its assets.

The FWC said that a share transfer would typically mean that the existing business would continue but would be conducted for the benefit of different shareholders, and there would be no need for employees to transfer to a new employer.

However, payslips issued to the worker by Geveko for the pay periods ending November 30 and December 31, 2023, supported the conclusion that by November 2023, the worker's employment had transferred to Geveko.

The worker’s dismissal and complaint

The termination of employment, which occurred on December 5, 2023, was affected by correspondence from Geveko to the worker.

The letter referred to the purchase by Geveko of all shares in Traffic Solutions from 'PPG' and the need for an organizational restructure, resulting in the worker's position being made redundant.

The FWC said that worker's complaint was always against PPG and not Geveko. He did not challenge the bona fides of the termination for reasons of redundancy but instead raised concerns about the fairness of the recruitment process.

The worker claimed that he had moved from New Zealand to take up the position with PPG, only to find that the company had sold the business within a week of his commencement.

The FWC's decision

The FWC said that by December 5, 2023, the worker was no longer employed by PPG. The available evidence indicated that Geveko was the entity that employed the worker at the time of the dismissal and ultimately terminated his employment.

“The [worker] bears the burden of proving that he was employed and dismissed by [PPG] at the relevant time in order for his case against the [PPG] to succeed,” the FWC said.

“The available evidence indicates that by 5 December 2023, the [worker] was no longer employed by the [PPG]. The [worker] accepted that there had been a sale of business on 17 October 2023. Geveko was the entity that had paid the [worker] his wages for the months of November and December, including his accrued entitlements on termination,” the FWC said.

“Although the evidence does not entirely explain how it was that the [worker] came to be employed and ultimately terminated by Geveko on 5 December 2023, it does support the view that Geveko was the entity that employed him by that time and ultimately terminated his employment,” it added.

Moreover, the FWC pointed out that the worker's application did not allege that the dismissal had occurred in contravention of Part 3-1 of the Act, which deals with general protections.

Instead, the worker complained of an unfair recruitment process and the financial and mental stress caused by his circumstances.

While the FWC acknowledged that the worker might feel aggrieved by the events that unfolded, it said that the application “was misconceived from the outset,” as there was nothing in the worker's material that alleged he had been dismissed in contravention of the relevant part of the Act. Consequently, it dismissed the worker’s application.

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