When is there a transfer of employment in a business agreement?
The Fair Work Commission (FWC) recently dealt with a worker’s unfair dismissal claim that said his period of service from his old employer “carried over” into his new workplace, such that he fulfilled the minimum employment period of six months.
The worker was employed by Ferrymen (Port Macquarie) Pty Ltd (Ferrymen) from 16 July 2022 until 6 January 2023, when he was notified of his dismissal.
In January 2023, he applied for an unfair dismissal remedy. Ferrymen argued he was not protected from unfair dismissal because he did not complete the minimum employment period of six months with Ferrymen.
‘Employed in the same role’
The worker said Ferrymen took over the vehicular ferry operations services in the North Region of New South Wales (NSW) on behalf of Transport for New South Wales (Roads and Maritime Services). The worker was formerly employed in “substantially the same role” by TONO Ferries, which lost the contract to Ferrymen.
He said his “prior service with TONO Ferries counts as service with Ferrymen, and he is eligible to make an unfair dismissal application.”
The FWC dealt with the question of whether the worker had completed the minimum employment period.
“There is no dispute that he became employed by Ferrymen on 16 July 2023, immediately upon the cessation of his employment with TONO Ferries. There is, however, no evidence that TONO Ferries and Ferrymen ever were, or are, associated entities. Instead, they are competitors for the provision of ferry services,” the commission found.
To consider a “transfer of business,” so it can be regarded as a “transfer of employment,” the following conditions must be fulfilled:
- The worker’s employment with TONO Ferries was terminated;
- Within 3 months after the termination, he became employed by Ferrymen;
- The work he performed for Ferrymen was the same, or substantially the same, as the work he performed for TONO Ferries, and
- There is a ‘transfer of assets’ connection between TONO Ferries and Ferrymen.
“The first three of these are established. His employment with TONO Ferries was terminated and he immediately became employed by Ferrymen. The work he performed for the two entities was substantially the same. [The question remains for the last condition,] whether there is a ‘transfer of assets’ connection between TONO Ferries and Ferrymen,” the decision said.
‘No evidence of an agreement’
The commission found Ferrymen has “the same beneficial use of assets (specifically, site amenities and vehicular ferries) as previously enjoyed by TONO Ferries.”
It found that these are assets owned by Transport for NSW that are “made available under contract for the purpose of the contractor providing vehicular ferry operations services on its behalf.”
“However, there is no evidence of any arrangement between TONO Ferries and Ferrymen, or any understanding or plan,” it said.
“TONO Ferries removed its own assets from relevant sites and ferries at the completion of its contract. Ferrymen then brought to those sites and ferries whatever of its own assets it saw as necessary to provide the contracted services,” it added.
The commission explained there was no transfer of assets between the two companies, saying that “while Ferrymen has the use of the same site amenities and ferries previously used by TONO Ferries, and these are used in connection with the work that the worker performed, this is the result of an arrangement between Ferrymen and Transport for NSW.”
“The consequence of this finding is that there was no transfer of business from TONO Ferries to Ferrymen and no transfer of employment,” the FWC said.
Thus, it found that the worker’s total period of continuous service as an employee of Ferrymen was five months and three weeks.
“This is less than the minimum employment period of six months,” it said.
“He has not completed the minimum employment period as an employee of Ferrymen, and [as such,] he is not a person protected from unfair dismissal,” the FWC said, dismissing the worker’s application.
