s.394 - Application for unfair dismissal remedy

Application for unfair dismissal remedy - minimum employment period - whether transfer of business.

[1] Ross Richards worked at the Sunshine landfill in Kealba, Victoria on and off from 12 April 2019 until 17 January 2020. After he lost his job, he applied to the Commission for an unfair dismissal remedy from Barro Group Pty Ltd. Barro Group says Mr Richards cannot bring an unfair dismissal claim because it employed him for less than six months. This decision is about whether Mr Richards is protected from unfair dismissal. The answer depends on how long he was employed by Barro Group.

[2] For his first two months at Sunshine landfill, Mr Richards was employed by a labour hire agency, Eire Workforce Solutions Pty Ltd. He ceased work on 15 June 2019 following a workplace injury and took a holiday to Canada to visit his children. Upon his return to Australia, he worked for another labour hire agency, TecSide Group Pty Ltd, at a different Barro Group site for a fortnight from 28 June 2019 to 12 July 2019.

[3] From 28 August 2019, Mr Richards resumed work at the Sunshine landfill, this time as a permanent employee of Barro Group. He worked mostly in the landfill 'tipface' crew. His employment was terminated on 17 January 2020.

[4] Mr Richards says that all of his time worked at the Sunshine landfill should count as service with Barro Group because there was a transfer of business from Eire Workforce to Barro Group in connection with his employment by Barro Group on a permanent basis from 28 August 2019.

[5] I am unable to agree that there was a transfer of business from Eire Workforce to Barro Group in relation to Mr Richards. These are my reasons.

[6] Section 22(5) of the Act generally provides for continuity of service for transferring employees in relation to a transfer of business. A transfer of employment from one employer to another occurs if the employee is employed by the new employer within 3 months of ceasing employment with the old employer to perform the same, or substantially the same, work and there is a connection between the two employers.[1]

[7] Four categories of 'connection' between employers may give rise to a transfer of business.[2] Two of those are relevant for present purposes: outsourcing of work and ceasing to outsource work (also known as 'insourcing').

[8] Mr Richards says there was an insourcing of work from Eire Workforce to Barro Group in relation to his employment on and from 28 August 2019. For there to have been an insourcing of work, that work must first have been outsourced to Eire Workforce and the outsourcing arrangement must have come to an end.

[9] There is no dispute that Mr Richards was employed by Barro Group within 3 months of ceasing work for Eire Workforce and that the work he performed for each of them as a member of the landfill tipface crew was substantially the same. The landfill tipface crew is responsible for the acceptance of waste at the Sunshine landfill, as well as placing and compacting waste into landfill cells (the Sunshine landfill work).

Was the Sunshine landfill work performed by Mr Richards and/or others as employees of Eire Workforce because Barro Group had outsourced that work to Eire Workforce?

[10] The concepts of 'outsourcing' and 'insourcing' are not defined in the Act. The Macquarie dictionary definition of outsource "to contract (work) outside the company rather than employ more in-house staff" has been adopted as the ordinary meaning of the term in previous decisions of the Commission.[3] The definition is broad. On one view, it would encompass any employer decision to use contractors to perform work. However, it also points to the need for a decision of the employer to engage contractors instead of employing more employees to undertake particular work.

[11] The Explanatory Memorandum to the Fair Work Bill 2008 provides guidance by way of examples of both insourcing and outsourcing for transfer of business purposes[4], summarised below:

1. Outsourcing: a human resources consultancy firm employs four security guards to man its reception desk. It decides that it no longer wishes to employ security guards directly. It contracts with another company for the provision of security services. The four security guards are employed by the new company and perform substantially the same work as they did for the consultancy firm.

2. Insourcing: after two years, the firm decides to employ security guards directly again. It terminates the contract with the security company and employs the security company's employees to perform substantially the same work as they were doing before.

[12] In the examples, there is a decision of the employer that it will not employ anyone to undertake a particular category of work directly. The work will be done instead by a contractor who takes responsibility for the performance of that category of work. In the case of insourcing, there is a subsequent decision of the employer that the contractor will no longer perform the work because it will be done by one or more direct employees instead.

[13] Much turns on the category of work which is said to have been outsourced. In the statutory context of section 311 of the Act, it is the 'transferring work', defined as the work transferring employees perform for the new employer that is the same, or substantially the same, as the work they performed for the old employer. In Mr Richards' case, that means the Sunshine landfill work.

Was there a decision by Barro Group not to employ employees to perform the Sunshine landfill work and instead to contract that work out to Eire Workforce?

[14] Nino Frasca is the Landfill Manager for Barro Group. He says the engagement of labour hire personnel at the Sunshine landfill commenced in the early days of the landfill in 2015. Initially labour hire employees were engaged through Tecside to fill a shortfall as the landfill business grew and workloads increased. The arrangement between Barro Group and Tecside was for the supply of personnel to meet identified labour shortfalls within the landfill. According to Barro Group, the arrangement remains in place.

[15] To improve the quality of labour provided, a decision was made in 2018 to engage the services of Eire Workforce, also to supply personnel on an as-needs and agreed cost basis. In 2019, Tecside also employed one member of the crew working alongside Mr Richards and Barro Group employed at least two permanent employees in the landfill crew, each of whom resigned in the weeks and months before Mr Richards commenced.

[16] The arrangement between Barro Group and Eire Workforce appears to be a conventional labour hire arrangement. It is not exclusive and there is no standing contract between them other than an agreed schedule of hourly rates. Barro Group can choose to call Eire Workforce when it needs to find workers. Eire Workforce then takes steps to source suitable employees and send them to work, including at the Sunshine landfill. Eire Workforce pays its employees and issues a purchase order to Barro Group for work performed at the agreed hourly rates. Barro Group pays invoices for work performed. A contract between Barro Group and Eire Workforce is made in relation to each individual worker sent to work at Barro Group.

[17] Mr Richards says the landfill tipface crew was usually comprised of four people and that while he was an employee of Eire Workforce, the work was all done by 'casuals', a term used to refer to labour hire workers. Mr Frasca says there were also permanent employees on the landfill tipface crew.

[18] I find that the composition of the landfill tipface crew varied from time to time but was usually a 'four man crew' (not including the landfill supervisor employed directly by Barro Group), sometimes comprised of direct employees and labour hire employees and sometimes only labour hire employees. Prior to Mr Richards' arrival, at least two permanent employees were employed on the crew. During the period that Mr Richards was engaged by Eire Workforce, the crew was comprised of labour hire workers only, in addition to the landfill supervisor. At or around the time that Mr Richards became an employee of Barro Group, it was comprised of three permanent employees of Barro Group, including Mr Richards, and most likely a fourth labour hire employee engaged to make up the crew of four as required.

[19] The fluctuating number of permanent and labour hire employees over time supports Barro Group's submission that the use of labour hire at the Sunshine landfill was to supplement its workforce as the need arose, as do the regular offers of permanent employment made by Barro Group to Mr Richards during his initial period of work at the landfill.

[20] The decision to engage the services of Eire Workforce in connection with Mr Richards' employment was motivated by the resignation of two permanent employees. There was no decision to contract out the Sunshine landfill work as an alternative to the employment of more employees. The decision was instead one of administrative convenience, to fill a short term gap and overcome Barro Group's difficulty in finding workers before employing new employees to replace the ones who had left in due course.

[21] It follows that the Sunshine landfill work was not outsourced to Eire Workforce and there was no outsourcing connection of the type described in section 311(4) of the Act.

[22] As the Sunshine landfill work was not outsourced, it was not possible to cease to outsource the work to Eire Workforce. There was no insourcing connection between Eire Workforce and Barro Group of the type described in section 311(5)(a).

[23] There is a second reason why the application cannot succeed. A decision to employ three permanent employees drawn from the six labour hire employees performing the Sunshine landfill work at the landfill led to the direct employment of Mr Richards by Barro Group. However, the employment of Mr Richards by Barro Group was not because its arrangement with Eire Workforce had ceased. The unchallenged evidence of Barro Group is that the arrangement between Eire Workforce and Barro Group for the provision of supplementary labour at the Sunshine landfill continues. Even if the Sunshine landfill work had been outsourced to Eire Workforce, Barro Group has not ceased to outsource that work to it. The condition for an 'insourcing' of work in section 311(5)(b) is not met.

[24] There was no transfer of business from Eire Workforce to Barro Group in relation to the employment of Mr Richards.

[25] Mr Richards was employed by Barro Group from 28 August 2019 until 17 January 2020. This period of continuous employment with Barro Group was less than 6 months. As a result, he did not complete the minimum employment period required of those who are protected from unfair dismissal. He is not a person protected from unfair dismissal.

[26] The application is dismissed.

A Dalton of the Australian Industry Group for Barro Group Pty Ltd.

[1] Fair Work Act 2009 (Cth), s311(1).

[2] Fair Work Act 2009 (Cth), s311(3)-(6).

[3] Burdziejko v ERGT Australia Pty Ltd [2015] FWC 2308; Abbott v Acciona Infrastructure Australia Pty Ltd [2018] FWC 5609.

[4] Explanatory Memorandum to the Fair Work Bill 2008 (Cth) at [1225] - [1226].

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