//
[2023] FWC 1771
General information, not legal advice.
Fair Work Commission
2023-08-16
Original judgment source is linked above.
s.394 - Unfair dismissal
Application for an unfair dismissal remedy-dispute as to whether minimum employment period completed-transfer of employment considered-jurisdictional objection upheld and application dismissed.
[1] On 25 May 2023, Mr David Howarth made an application to the Fair Work Commission for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (the Act). The Respondent to Mr Howarth's unfair dismissal application is ResourceCo Material Solutions Pty Ltd, which trades as ResourceCo Pty Ltd (ResourceCo). Mr Howarth contends he began working for ResourceCo on 1 August 2022 and that he was dismissed on 22 May 2023, a period just short of 10 months.
[2] ResourceCo filed a Form F3 - Employer Response to application for an Unfair Dismissal Remedy (Form F3) in response, in which it detailed that Mr Howarth commenced employment on 6 March 2023, was notified of his dismissal on 22 May 2023 and at that time, it had 71 employees. ResourceCo has thereby raised the jurisdictional objection that Mr Howarth did not serve the applicable minimum employment period of 6 months and is therefore not a person who is protected from unfair dismissal in accordance with s.382 of the Act.
[3] On 27 June 2023, the matter was allocated to me for determination of the jurisdictional objection and I issued Directions for the filing of material on 3 July 2023. Both parties filed and served material in response and I conducted a Determinative Conference via Microsoft Teams on 28 July 2023. Mr Howarth appeared and gave evidence, also calling Mr Lance Scott, Recruitment Specialist/General Manager of 1800 Drivers as a witness in support. Ms Carly Brown, National HR Manager, appeared and gave evidence for ResourceCo.
[4] Both parties contend Mr Howarth was notified of his dismissal on 22 May 2023. ResourceCo submitted that Mr Howarth was dismissed as a result of an unsuccessful probation period. The 'Termination of employment' letter dated 22 May 2023 asserted that Mr Howarth's probation period was "due to end on 7 September 2023" and then stated:
"We confirm that we have decided not to continue your employment beyond your probationary period. As a result, your employment will end today, 22 May 2023.
You will receive one week payment in lieu of notice as well as any accrued entitlements."
[5] Mr Howarth said he was an employee of 1800Drivers during the period from 1 August 2022 until 6 March 2023 pursuant to an oral agreement. He said his understanding was that the period of time he served with 1800Drivers was a probationary period and once he had undertaken this period with 1800Drivers and if ResourceCo was happy with his work, he would be transferred to ResourceCo as a full-time employee.
[6] Mr Howarth said that during the period from 1 August 2022 until 6 March 2023, he was paid an hourly rate by 1800Drivers as a casual employee and worked in excess of 45-50 hours per week exclusively with ResourceCo. He said there was no accrual of annual leave during this period and there was no payout made to him by 1800Drivers at the end of it. These matters were confirmed by Mr Scott, who added there was a group certificate produced for Mr Howarth from 1800Drivers covering the period from 1 August 2022 until 5 March 2023 and gave the following evidence when asked how Mr Howarth's employment with 1800Drivers was to be characterised:
"MR HOWARTH: Yes. Would you say it was a fair assessment that whilst I was working with you, if I was to become a full‑time employee of ResourceCo, that would be probationary period.
MR SCOTT: Normally, yes. So when we've got guys in there, they'll go in for a period, and that is basically a probationary, and that's when they do take them over to the full‑time role. So we're just used as the probationary, because if it doesn't work out, then we just replace that person."[1]
[7] Mr Howarth said it was always his understanding, based on his conversations with the then transport manager of ResourceCo, Mr Ben Ford, that his period with 1800Drivers was his probationary period. Mr Howarth stated he was invited to begin the process of becoming a full-time employee on 3 November 2022, when notified by RecourseCo that he needed to attend a driver's medical appointment on 12 November 2022. He said he transferred straight over to ResourceCo on 6 March 2023.
Hope all is well, Hey Bud when you get a chance can you call me as I have a few drivers for you and they keep hounding me when they can start,
So if we can go through them together and workout who you would like to look at and who you want to start before we lose them in the system as I would need to untick them as I have all of them on hold so the girls can't steal them before we talk about them..."
[9] Mr Scott provided an overview of the relationship between 1800Drivers and Resource Co. Upon request from ResourceCo, 1800Drivers provides a recruitment service which covers placing advertisements, sourcing candidates, conducting pre-screening interviews and providing quotes outlining labour prices. Once a candidate is selected by ResourceCo, 1800 Drivers creates a profile for them and the candidate commences the placement with ResourceCo. Mr Scott and Mr Howarth gave the following evidence:
"MR SCOTT: ...when they're placed into a company, everything's done online through what we call a portal. So the driver goes in, he goes into a timesheet, clicks that, and it knows his at ResourceCo when he's done the QR code. So the QR code is just a scan so he knows the company, the site, who his supervisor is and then, yes, so he clicks that and then at the end of the day, he scans it again so that'll do his time on/time off.
THE DEPUTY PRESIDENT: Yes. All right. So could you just explain - - -So Mr Howarth, you'd scan the QR code, and that was in the offices of ResourceCo, was it?
THE DEPUTY PRESIDENT: All right. And Mr Scott, you'd create a QR code for the work that was being performed at ResourceCo or ‑ ‑ ‑
MR SCOTT: No. So we design a QR code for a client and the site that he's at.
THE DEPUTY PRESIDENT: I see. All right. And then, what, you'd send that to the client as well?
MR SCOTT: So that gets sent to the client for them to display it for the drivers.
MR SCOTT: Yes, and as Carly said, I mean, it's your schedulers. So neither Ms Brown or I do that, so that is done by on-site manager who knows what clients needs it for that day, for that week, so they forecast and they plan ahead, allocating knowing what drivers they need. Yes, that's their job, we stay out of that, because yes, Ms Brown and I get our arses chewed if we jump in and try and overmine them.
MR SCOTT: So they run that side of it, we're just basically, you know, look after the staffing, making sure it's all right."[3]
[10] The profile described by Mr Scott serves to record details pertaining to a worker, such as whether there are any workplace incidents. The portal records the hours of work for 1800Drivers' payroll purposes following verification by ResourceCo.
[11] Mr Scott confirmed that 1800Drivers do not have involvement with the operations of ResourceCo. His evidence in this regard included the following:
"THE DEPUTY PRESIDENT: What I'm getting at is you dealt with Ben and Wade at ResourceCo.
THE DEPUTY PRESIDENT: They told you the sort of drivers that they needed and you would source them and supply them, but from there you didn't have any dealing with the day‑to‑day operations of the ResourceCo quarries.
MR SCOTT: Not on that, no. We just do - I suppose we just - yes, just keep in touch with them, making sure everything's all good, that they're happy with the drivers, there's no issues, no dramas, no crashes.
THE DEPUTY PRESIDENT: And insofar as ResourceCo is performing work for customers of ResourceCo, you didn't deal with those customers of ResourceCo.
MR SCOTT: No. No agency will, just the drivers."[4]
Ok I have talked to payroll and got the hours and weeks for the boys.
I then asked for a pay out price with consideration and then repout [sic] we have they price for both boys.
[13] Mr Scott described the 'pay out price' as an arrangement between 1800Drivers and ResourceCo whereby ResourceCo paid a transfer fee to 1800Drivers if they proceeded to employ a driver who had been placed with them by 1800Drivers. While Ms Brown was not aware of the specific terms and conditions of the commercial arrangements between 1800Drivers and ResourceCo, she confirmed that the payment arrangement described by Mr Scott was of a nature used by ResourceCo in it relationships with labour hire companies.
[15] ResourceCo relied on a Letter of Appointment dated 2 March 2023, which outlined an offer of employment to Mr Howarth set out in attached terms and conditions of employment and a Schedule, together described as the 'Agreement'. The 'Agreement', signed by Mr Howarth on 3 March 2023, detailed employment with ResourceCo Material Solutions Pty Ltd commencing on of 6 March 2023 in the full-time position of HR Driver - Grade 8.
[16] The 'Agreement' also provided that Mr Howarth's employment could be terminated "in accordance with the Applicable Industrial Instrument", which was listed in the Schedule as being the Road Transport and Distribution Award 2020. Clause 34 of the Award provides that the National Employment Standards set out the requirements for notice of termination by an employer and referred to s.117 of the Act. Specifically, s.117(3)(a) of the Act provides for a minimum period of notice of 1 week for an employee with not more than 1 year of continuous service at the end of the day the notice of termination is given.
[17] Ms Brown described the business of ResourceCo being the transport of soils and waste, be it construction and demolition waste or construction and infrastructure waste. These services are carried out ResourceCo's own quarries or for customers who require the removal of contaminated soils which are then treated by ResourceCo and on-sold. Both Ms Brown and Mr Scott gave evidence that neither of them are involved in ResourceCo's scheduling of work, with this task left to the ResourceCo operations managers.
[18] Ms Brown gave evidence that at the time of Mr Howarth's dismissal, ResourceCo had 15 other drivers employed in Victoria. Ms Brown said ResoureCo's utilisation of labour hire is managed by its operations personnel and that when ResourceCo is required to perform additional runs as a result of customer requirements, it will contact a labour hire company at first instance because the labour hire workers will have been screened by the labour hire companies and are "ready to go", such that this delivers a faster turnaround time than a recruiting process through a central human resource function.
[19] Ms Brown said that if ResourceCo is not happy with an individual provided by a labour hire service, it will advise the labour hire service that day and the labour hire service will then advise that individual concerned that they will not be required by ResourceCo the following day. Ms Brown confirmed that if a labour hire worker was excelling and enjoying the work, ResourceCo would engage in dialogue with them to ascertain whether they were interested in becoming a full‑time ResourceCo employee. Ms Brown asserted such a discussion would not be conducted at the beginning of the labour hire agreement because the prospect of ongoing work might not be clear at that stage. Further, Ms Brown made the observation that ResourceCo's work was not for everybody, so a labour hire placement provides a good opportunity for both sides to understand if it's something they'd like to continue with.
[20] Ms Brown gave evidence that ResourceCo uses multiple labour hire companies to source workers in Victoria, including Branch People and FHR in addition to 1800Drivers. She said the use of labour hire was dependent on fluctuations in work and ResourceCo looks at converting labour hire workers to employees where the opportunities exist, with such conversion dependent on the growth of ResourceCo's business at the time. There would be initial dialogue between ResourceCo operations personnel and human resources, an assessment of the identified labour hire worker against the pre-employment requirements and the preparation and provision of an employment contract once the identified labour hire worker had confirmed they were interested in becoming directly engaged as an employee. Ms Brown said the requisite inductions would follow and she argued it would be very clear to an individual when they were converting from labour hire to a ResourceCo employee.
[21] Ms Brown said ResourceCo does not pay the labour hire drivers but rather,1800Drivers submits invoices relating to their work which are then, subject to approval, paid by ResourceCo. This was confirmed by Mr Scott. Ms Brown also addressed the 'pay out price' arrangement between 1800Drivers and ResourceCo described by Ms Scott and while not able to speak to the specific terms and conditions, confirmed that payments made in this way had been common practice for ResourceCo.
[22] Section 382 of the Act provides that for a person to be protected from unfair dismissal, they must have completed a period of employment with their employer of at least the minimum employment period. There is no dispute that the minimum employment period applicable to Mr Howarth was 6 months.
[23] Relevantly, 'Period of employment' is defined in s.384 of the Act as follows:
"384(1) An employee's period of employment with an employer at a particular time is the period of continuous service the employee has completed with the employer at that time as an employee.
[24] ResourceCo contended that it had only employed Mr Howarth from 6 March 2023 until 22 May 2023 and as such, his period of service was two and a half months. Mr Howarth regards his time at 1800Drivers as probationary period for ResourceCo and as such, contended his service commenced on 1 August 2022, even though he was employed by 1800 Drivers from 1 August 2022 until 5 March 2023.
[25] 'Service' is relevantly defined in s.22 of the Act as follows:
(1) A period of service by a national system employee with his or her national
system employer is a period during which the employee is employed by the
employer, but does not include any period (an excluded period) that does not count as service because of subsection (2).
When service with one employer counts as service with another employer
(5) If there is a transfer of employment (see subsection (7)) in relation to a national system employee:
(a) any period of service of the employee with the first employer counts as service of the employee with the second employer; and
(b) the period between the termination of the employment with the first employer and the start of the employment with the second employer does not break the employee's continuous service with the second employer (taking account of the effect of paragraph (a)), but does not count towards the length of the employee's continuous service with the second employer.
(7) There is a transfer of employment of a national system employee from one national system employer (the first employer) to another national system employer (the second employer) if:
(i) the employee becomes employed by the second employer not more than 3 months after the termination of the employee's employment with the first employer;
(ii) the first employer and the second employer are associated entities when the employee becomes employed by the second employer; or
(i) the employee is a transferring employee in relation to a transfer of business from the first employer to the second employer;
(ii) the first employer and the second employer are not associated entities when the employee becomes employed by the second employer.
Note: Paragraph (a) applies whether or not there is a transfer of business from the first employer to the second employer.
(a) is a transfer of employment between associated entities if paragraph (7)(a) applies; and
(b) is a transfer of employment between non-associated entities if paragraph (7)(b) applies.
[26] Essentially, Mr Howarth's proposition is that his period of service with 1800Drivers counts as service with ResourceCo because there was a transfer of his employment from 1800Drivers to ResourceCo. In order for there to have been a transfer of employment in this case, Mr Howarth must have been a transferring employee in relation to a transfer of business from 1800Drivers to ResourceCo and, as these two corporate entities are non-associated entities, s.22(7)(b) of the Act applies.
[27] A "transfer of business" is not defined in s.22(7)(b) of the Act. Rather, it is defined in s.311 of the Act, as follows:
Meanings of transfer of business, old employer, new employer and transferring work
(1) There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:
(a) the employment of an employee of the old employer has terminated;
(b) within 3 months after the termination, the employee becomes employed by the new employer;
(c) the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;
(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).
(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.
Transfer of assets from old employer to new employer
(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:
(a) the old employer or an associated entity of the old employer; and
(b) the new employer or an associated entity of the new employer;
the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):
(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and
(d) that relate to, or are used in connection with, the transferring work.
(4) There is a connection between the old employer and the new employer if the transferring work is performed by one or more transferring employees, as employees of the new employer, because the old employer, or an associated entity of the old employer, has outsourced the transferring work to the new employer or an associated entity of the new employer.
New employer ceases to outsource work to old employer
(5) There is a connection between the old employer and the new employer if:
(a) the transferring work had been performed by one or more transferring employees, as employees of the old employer, because the new employer, or an associated entity of the new employer, had outsourced the transferring work to the old employer or an associated entity of the old employer; and
(b) the transferring work is performed by those transferring employees, as employees of the new employer, because the new employer, or the associated entity of the new employer, has ceased to outsource the work to the old employer or the associated entity of the old employer.
[28] In the circumstances of this case, for Mr Howarth's service with 1800Drivers to be counted towards his service with ResourceCo, the following preconditions must exist:
a) Mr Howarth's employment with 1800Drivers must have terminated;
b) Within 3 months of that termination, Mr Howarth must have become an employee of ResourceCo;
d) There must be a connection between 1800Drivers and ResourceCo as described in any of subsections (3) to (6) of s.311 of the Act.
s.311(3) - Transfer of assets from 1800Drivers to ResourceCo?
[30] It was not contended and nor do I consider that s.311(3) of the Act applies in this case. It has not been suggested that there has been a transfer of assets from 1800Drivers to ResourceCo.
s.311(4) - 1800Drivers outsources work to ResourceCo?
[31] As regards s.311(4) of the Act, neither party has suggested, and nor am I persuaded, that the operational work was performed by Mr Howarth as an employee of ResourceCo because 1800Drivers had outsourced the operational work to ResourceCo.
[32] 1800Drivers is a specialist recruitment agency and in providing its services to ResourceCo, it was not involved in operational aspects of the work. In particular, 1800Drivers played no part in directing the operational work of Mr Howarth and nor did it schedule or allocate work for or to him.
[33] The status of 1800Drivers is confirmed by a review of its webpage (drivers.com.au), which includes the claim of being "Australia's Leading Driver Hire & Transport Industry Recruitment Specialist" and the following:
"Looking for drivers for hire in Australia? We are the #1 transport and logistics recruitment agency, specialising in matching skilled drivers with hiring companies. Candidates can create a free profile and browse through hundreds of driver job listings to find employment today. Are you looking to hire drivers? Browse our candidate profiles, or call 1800DRIVERS to hire our professional Truck Drivers, Forklift Drivers & Labourers."
[34] The 1800Drivers webpage also outlines various services provided, including daily pays with 'on demand pay' and easy time keeping via an app, labour hire, shortlisting, permanent recruitment, job advertising and listings of available jobs.
s.311(5) - ResourceCo ceases to outsource work to 1800Drivers?
[35] For s.311(5) of the Act to apply, the operational work performed by Mr Howarth for ResourceCo needs to have been performed by him as an employee of 1800Drivers because:
a) ResourceCo had outsourced the operational work to 1800Drivers; and
b) the operational work was then performed by Mr Howarth as an employee of ResourceCo because ResourceCo had ceased to outsource the work to 1800Drivers.
[37] At all material times, ResourceCo directly employed drivers to perform operational work. In addition to directly employed drivers, ResourceCo has also supplemented its labour force according to specific operational requirements that have arisen from time to time. It has done so by recruiting additional workers employed by 1800Drivers and/or other labour hire providers.
[40] I am not persuaded that the work subsequently performed by Mr Howarth from 6 March 2023 as a ResourceCo employee was a result of ResourceCo having ceased outsourcing operational work to 1800Drivers and/or other labour hire providers. The nature of the relationship between ResourceCo and 1800Drivers is indicative of an employer having engaged supplementary labour from a specialist recruitment firm as opposed to being a scenario involving the outsourcing of work. Even if there had been outsourcing to 1800Drivers, there was no suggestion that the commercial arrangements between ResourceCo and 1800Drivers involving the recruitment of supplementary labour ceased when Mr Howarth became employed by ResourceCo on 6 March 2023. ResourceCo drivers continue to perform the operational work and ResourceCo continues to source supplementary labour.
[41] Based on the facts of this matter, I am not persuaded there is the connection between ResourceCo and 1800Drivers pursuant to s.311(5) of the Act.
[42] Undoubtedly Mr Howarth believes the time he spent working for ResourceCo as an employee of 1800Drivers was a probationary period and that it was intended to count as service with ResourceCo. However, neither the Letter of Appointment dated 2 March 2023, nor the 'Agreement' he signed on 3 March 2023 reflect this and further, I am not satisfied that there was the connection between ResourceCo and 1800Drivers required by s.311(1)(d) of the Act. As such, even though the requirements in ss.311(1)(a) - (c) may have been met, there was no 'transfer of business' between ResourceCo and 1800Drivers. The consequence of these findings is that there is no 'transfer of employment' (s.22(7) of the Act) and as such, the period of Mr Howarth's service with 1800Drivers does not count as service with ResourceCo (s.22(5)).
[43] I have therefore concluded that Mr Howarth's service with ResourceCo is limited to the period from 6 March 2023 until 22 May 2023 (a period of service of two and a half months) and he has therefore not completed the applicable minimum employment period of 6 months. As such, Mr Howarth is not a person protected from unfair dismissal and his application for an unfair dismissal remedy must be dismissed. An Order to this effect will be issued with this Decision.
[8] For s.311(6) to have been applicable, ResourceCo would have had to have been an associated entity of 1800Drivers when Mr Howarth became employed by it. It was not.
[9] Nicole Burdziejko v ERGT Australia Pty Ltd [2015] FWC 2308 at [26] and Steve Cokuzovski v Yarra City Council T/A Yarra City Council [2018] FWC 155 at [84].
[12] Mr Jared Abbott v Acciona Infrastructure Australia Pty Ltd [2018] FWC 5609 at [47].
Printed by authority of the Commonwealth Government Printer
David Howarth
ResourceCo Pty Ltd [2023] FWC 1771