Andrew Crossin v Tazzy Tyres Accessories Pty Ltd T/A Tazzy Tyres

[2016] FWC 6525

[2016] FWC 6525

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Andrew Crossin
v
Tazzy Tyres Accessories Pty Ltd T/A Tazzy Tyres
(U2016/6991)

DEPUTY PRESIDENT CLANCY MELBOURNE, 12 SEPTEMBER 2016

Application for relief from unfair dismissal - jurisdiction - minimum employment period not completed.

[1] Mr Andrew Crossin has alleged that the termination of his employment by Tazzy Tyres Accessories Pty Ltd T/A Tazzy Tyres (Tazzy Tyres) was unfair.

[2] Tazzy Tyres says Mr Crossin was not protected from unfair dismissal because he had not served the minimum employment period pursuant to s.382(a) of the Fair Work Act 2009 (Cth) (the Act).

The Facts

[3] Mr Crossin said he was employed as a tyre fitter for JB Enterprises Tas. Pty Ltd (JB Enterprises) for approximately 3 years until the end of 2015 and the owner of JB Enterprises was Mr Jonathan Barnes. At the start of January 2016, Mr Crossin said Mr Barnes told him that he could not run the business, which is located in Sorrell, anymore and Mr Aaron Vasicek would be taking over the business. He said Mr Vasicek told him that he would keep him on if he wanted and he worked between the hours of 8.30am and 5.00pm Monday-Friday, with an arrangement to sometimes work on Saturday from 8.30am until 2.00pm with Monday off. Mr Crossin said he was aware that Tazzy Tyres had a different Australian Business Number (ABN) to JB Enterprises but said that he had no discussion with Mr Vasicek about any arrangements between Mr Barnes and Mr Vasicek. Mr Crossin also said he did not know what was discussed between Mr Barnes and Mr Vasicek about the changeover in the business.

[4] Ms Lisa Walker, who performs a variety of human resources, administrative and book keeping functions for Tazzy Tyres, said Mr Crossin commenced employment with Tazzy Tyres on 4 January 2016 and was terminated on 2 May 2016. Ms Walker confirmed the payslips for Mr Crossin during his employment were issued by Tazzy Tyres Accessories Pty Ltd. She said Tazzy Tyres sells wheels and tyres and performs services such as wheel alignments and has other outlets at Kingston, Rosny, Hobart and Derwent Park.

[5] Mr Vasicek, the owner of Tazzy Tyres, confirmed that Tazzy Tyres Accessories Pty Ltd and Tazzy Tyres Pty Ltd share the same Australian Business Number (ABN).

[6] He said that JB Enterprises was a Tazzy Tyres licensee but by the end of 2015, it was going bankrupt. Mr Vasicek said he told the property owner, Ms May Ma, that if Mr Barnes was going to shut down his business, he would like to take over the existing building. Mr Vasicek said he did not enter into any arrangement with Mr Barnes and there was no documentation between them.

[7] Mr Vasicek said he negotiated a new lease for the Sorrell premises directly with Ms Ma after she had terminated her lease agreement with Mr Barnes. He said he had to demonstrate to Ms Ma that his was a different entity to JB Enterprises and convince her to lease him the premises.

[8] Mr Vasicek said when he started operating from the Sorrell premises, he brought in an entirely new set of equipment, including a brand new tyre fitting machine, new hoist, new air compressor and all new leads, ‘guns’ and tools.

[9] Only one piece of equipment that had been used by JB Enterprises remained in the premises. It was a four-post hoist which did not work and so did not get used by Mr Vasicek or Tazzy Tyres. Mr Vasicek said it had not worked for some time and was “just sitting there”. Mr Vasicek said it was owned by Mr Graham Cox, who had been a financier to Mr Barnes and that he made three or four payments of $900 to Mr Cox in relation to it pursuant to a hand shake agreement until it was removed. Mr Vasicek said that he did not have to go into an agreement to have the hoist at the premises, but he was trying to help and “didn’t want it to be financially burdened to other people.” 1

[10] Mr Vasicek said Mr Barnes sent the stock he held back to the suppliers to whom he owed money and this included the stock Mr Barnes had purchased from him, but could not pay for. There was no stock left behind by Mr Barnes when he moved into the premises. Mr Vasicek subsequently employed Mr Barnes at his Kingston store.

[11] Mr Vasicek confirmed there was no formal process of recruitment for Mr Crossin. He said that his intention was to engage Mr Crossin for 38 hours over five days per week on hours of 8.30am-5.00pm. He said that Mr Crossin’s attendance was not consistent due to family and other issues, which resulted in numerous days off in a row. As to whether he was going to engage Mr Crossin as an ongoing employee, Mr Vasicek said he did not know what kind of an employee Mr Crossin was when he first engaged him but subsequently discovered what his work capabilities were.

Applicable Law

[12] Section 22 of the Act relevantly provides:

“22 Meanings of service and continuous service

…

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.

Note: This subsection does not apply to a transfer of employment between non-associated entities, for the purpose of Division 6 of Part 2-2 (which deals with annual leave) or Subdivision B of Division 11 of Part 2-2 (which deals with redundancy pay), if the second employer decides not to recognise the employee’s service with the first employer for the purpose of that Division or Subdivision (see subsections 91(1) and 122(1)).

(6) If the national system employee has already had the benefit of an entitlement the amount of which was calculated by reference to a period of service with the first employer, subsection (5) does not result in that period of service with the first employer being counted again when calculating the employee’s entitlements of that kind as an employee of the second employer.

Note: For example:

(a) the accrued paid annual leave to which the employee is entitled as an employee of the second employer does not include any period of paid annual leave that the employee has already taken as an employee of the first employer; and

(b) if an employee receives notice of termination or payment in lieu of notice in relation to a period of service with the first employer, that period of service is not counted again in calculating the amount of notice of termination, or payment in lieu, to which the employee is entitled as an employee of the second employer.

Meaning of transfer of employment etc.

(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:

(a) the following conditions are satisfied:

(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

(b) the following conditions are satisfied:

(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.

(8) A transfer of employment:

(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.”

[13] Section 311 of the Act relevantly provides:

“311 When does a transfer of business occur

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).

Meaning of transferring employee

(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.
…”

[14] Section 383 of the Act provides:

“383 Meaning of minimum employment period

The minimum employment period is:

(a) if the employer is not a small business employer—6 months ending at the earlier of the following times:

(i) the time when the person is given notice of the dismissal;

(ii) immediately before the dismissal; or

(b) if the employer is a small business employer—one year ending at that time.”

[15] Section 384 of the Act provides:

“384 Period of employment

(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.

(2) However:

…

(b) if:

(i) the employee is a transferring employee in relation to a transfer of business from an old employer to a new employer; and

(ii) the old employer and the new employer are not associated entities when the employee becomes employed by the new employer; and

(iii) the new employer informed the employee in writing before the new employment started that a period of service with the old employer would not be recognised;

the period of service with the old employer does not count towards the employee’s period of employment with the new employer.”

Consideration

[16] In order to be protected from unfair dismissal, Mr Crossin must have served the minimum employment period (s.382(a) of the Act). In this case, Tazzy Tyres indicated it had 15 employees at the time Mr Crossin was dismissed, 2 so the minimum employment period is 12 months.3 It is not disputed that Mr Crossin’s period of employment with Tazzy Tyres was from 4 January 2016 until 2 May 2016. It is also not disputed that Mr Crossin had approximately three years continuous service with the old employer/JB Enterprises.

[17] It was not asserted that Tazzy Tyres and JB Enterprises were associated entities or that Tazzy Tyres informed Mr Crossin in writing before his employment with Tazzy Tyres started that his service with JB Enterprises would not be recognised.

[18] I must determine whether any period of Mr Crossin’s employment with the old employer counts as service with Tazzy Tyres. It will count, having regard to the circumstances of this case, provided I am satisfied that there was a transfer of his employment within the meaning of s.22(8)(b) of the Act. This requires Mr Crossin to have been a “transferring employee in relation to a transfer of business” from JB Enterprises to Tazzy Tyres pursuant to s.22(7)(b) of the Act.

[19] Section 311 of the Act sets out the requirements for a transfer of business. In broad terms, it requires there to be a “transferring employee” and “a connection between the old employer and new employer”, as defined in any of subsections 311(3) to (6) of the Act.

[20] Section 311(2) of the Act provides that a “transferring employee” in relation to a transfer of business is an employee to whom the following requirements are satisfied:

• The employment of an employee of the old employer has terminated (s.311(1)(a) of the Act);



• Within 3 months after the termination, the employee becomes employed by the new employer (s.311(1)(b) of the Act);



• The 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 (s.311(1)(c) of the Act).

[21] Mr Crossin submitted that there was a transfer of business. He submitted his employment with the old employer was terminated on 3 January 2016 (s.311(1)(a) of the Act) and he was offered employment with Tazzy Tyres in the conversation with Mr Vasicek, which he accepted, and he commenced work on 4 January 2016 (s.311(1)(b) of the Act). As to the requirements of s.311(1)(c) of the Act, Mr Crossin submitted the work he performed for Tazzy Tyres as a tyre fitter was essentially the same work he performed for the old employer/JB Enterprises.

[22] These submissions were not challenged by Tazzy Tyres.

[23] Therefore, if Mr Crossin can be said to have been a transferring employee by virtue of satisfying the requirements in ss. 311(1)(a)-(c), the question to be determined is whether the requirement in s.311(1)(d) that there be a “connection” between Tazzy Tyres and JB Enterprises, as described in any of subsections 311(3) to (6) of the Act, is also satisfied.

[24] It was not submitted, and nor do I find, that any of subsections 311(4) to (6) of the Act apply. I must therefore consider whether there was a transfer of assets from JB Enterprises to Tazzy Tyres within the meaning of s.311(3) of the Act. If there was, there will have been a transfer of business pursuant to s.311(1) of the Act by virtue of the interaction between s.311(1)(d) and s.311(3) of the Act.

[25] Mr Crossin submitted there was a transfer of business between Tazzy Tyres and JB Enterprises on the basis that the business has continued to trade as Tazzy Tyres and the nature of the business is the same. However, Mr Crossin admitted he did not know what the arrangement between Tazzy Tyres and JB Enterprises was and could give no evidence about it.

[26] Mr Vasicek, for Tazzy Tyres, submitted that there was no connection between Mr Barnes and his business at all. He also advised that he owns the trading name ‘Tazzy Tyres’, he had granted Mr Barnes permission to use it when he was operating the business at Sorrell and that it is used at all other Tazzy Tyres outlets.

[27] As outlined above, s.311(3) of the Act provides that there will be “a connection” between JB Enterprises and Tazzy Tyres if, in accordance with an “arrangement” between them, Tazzy Tyres “owns or has the beneficial use of some or all of the assets (whether tangible or intangible)” that JB Enterprises “owned or had the beneficial use of” and “that relate to or are used in connection with the transferring work”.

[28] The words “in accordance with an arrangement” were considered by the Full Bench of the Commission in John Lucas Hotel Management Services (t/as World Square Pub) v Hillie 4 (Hillie) as follows:

“[19] We agree with Commissioner Bissett in Zabrdac that guidance as to the use and meaning of the word “arrangement” can be found in a previous judgements concerning trade practices and taxation matters. In Australian Competition & Consumer Commission v CC (NSW) Pty Ltd Lindgren J considered the meaning of “arrangement or understanding”. He noted:

‘135 In Newton v Federal Commissioner of Taxation [1958] UKPCHCA 1; (1958) 98 CLR 1 the Privy Council was concerned with the expression "[e]very contract, agreement, or arrangement" in s 260 of the Income Tax and Social Services Contribution Assessment Act 1936 (Cth), and expressed the opinion (at 7):

"that the word `arrangement' is apt to describe something less than a binding contract or agreement, something in the nature of an understanding between two or more persons - a plan arranged between them which may not be enforceable at law." (emphasis supplied)

Clearly, the scope of ss 45(2) and 45A(1) with which I am concerned extends beyond legally enforceable agreements, that is, contracts.

136 In British Basic Slag Ltd v Registrar of Restrictive Trading Agreements [1963] 1 WLR 727, the English Court of Appeal had to consider the meaning of the expression "any agreement or arrangement, whether or not it is or is intended to be enforceable" in s 6 of the Restrictive Trade Practices Act 1956 (UK). It was argued that the trial Judge had erred in holding that an arrangement within the meaning of the expression exists when, by communications between the parties, "each has intentionally aroused in the other an expectation that he will act in a certain way." It was submitted that the expression also required "that there must be mutuality in the acceptance of rights and obligations". In the Court of Appeal, Willmer LJ said (at 739):

" ..., I think it is highly significant that Parliament did not see fit to include any definition of `arrangement.' I infer from this that it was intended that the word should be construed in its ordinary or popular sense. Though it may not be easy to put into words, everybody knows what is meant by an arrangement between two or more parties. If the arrangement is intended to be enforceable by legal proceedings, as in the case where it is made for good consideration, it may no doubt properly be described as an agreement. But the Act of 1956 clearly contemplates that there may be arrangements which are not enforceable by legal proceedings, but which create only moral obligations or obligations binding in honour. This seems to me to be entirely consistent with the dictum of Upjohn J. to which I have already referred. Nor do I consider that there is any inconsistency between that and the view expressed by the judge in the present case. For when each of two or more parties intentionally arouses in the others an expectation that he will act in a certain way, it seems to me that he incurs at least a moral obligation to do so. An arrangement as so defined is therefore something `whereby the parties to it accept mutual rights and obligations.'"

In the same case, Diplock LJ said that there were many ways in which arrangements might be made and (at 747):

"[I]t is sufficient to constitute an arrangement between A and B, if (1) A makes a representation as to his future conduct with the expectation and intention that such conduct on his part will operate as an inducement to B to act in a particular way, (2) such representation is communicated to B, who has knowledge that A so expected and intended, and (3) such representation or A's conduct in fulfilment of it operates as an inducement, whether among other inducements or not, to B to act in that particular way." (at 747)

137 In Top Performance Motors Pty Ltd v Ira Berk (Qld) Pty Ltd (1975) 24 FLR 286, a Full Court of this Court had to consider the expression "a contract, arrangement or understanding to the extent that it is in restraint of trade or commerce" in the then s 45(2)(b) of the Act. Smithers J referred to Newton and British Basic Slag and said (at 291) of the expression "arrangement", that by parity of reasoning with British Basic Slag:

" ... the existence of an arrangement of the kind contemplated in s.45 is conditional upon a meeting of the minds of the parties to the arrangement in which one of them is understood, by the other or others, and intends to be so understood, as undertaking, in the role of a reasonable and conscientious man, to regard himself as being in some degree under a duty, moral or legal, to conduct himself in some particular way, at any rate so long as the other party or parties conducted themselves in the way contemplated by the arrangement."

His Honour added:
"Where the minds of the parties are at one that a proposed transaction between them proceeds on the basis of the maintenance of a particular state of affairs or the adoption of a particular course of conduct, it would seem that there would be an understanding within the meaning of the Act."

138 In Trade Practices Commission v Nicholas Enterprises Pty Ltd(No 2) (1979) 40 FLR 83, Fisher J considered the notion of a "contract, arrangement or understanding" in the context of s 45 of the Act. After setting out certain passages from the cases, his Honour concluded (at 89):

"A significant feature of each of the above passages is the emphasis placed upon the necessity for each of the parties to have communicated with the other, for each to have raised an expectation in the mind of the other, and for each to have accepted an obligation qua the other. These are in my opinion the essential elements of the requisite meeting of minds." (emphasis supplied)

(His Honour appears to have seen the words "arrangement" and "understanding" as synonymous in the present context, as Toohey J seems to have done in Hughes v Western Australian Cricket Association (Inc) (1986) 19 FCR 10 at 32.)

139 On appeal in the Nicholas Enterprises case (see Morphett Arms Hotel Pty Ltd v Trade Practices Commission [1980] FCA 46; (1980) 30 ALR 88), the Full Court expressed agreement with Fisher J's statement and application of the relevant principles of law subject to one qualification: the Court thought it possible to have an understanding restricted to the conduct which one of the parties to it would pursue "without any element of mutual obligation, in so far as the other party or parties to the understanding are concerned" (at 91-92). It was not, however, necessary for their Honours to reach any final view on this question which has since been left open, although the view has been expressed that in an arrangement or understanding where one party assumes an obligation, a reciprocal obligation would commonly be assumed by the other party or parties; see Trade Practices Commission v Email Ltd [1980] FCA 86; (1980) 43 FLR 383 (Lockhart J) at 395-397; Trade Practices Commission v Parkfield Operations Pty Ltd [1985] FCA 27; (1985) 5 FCR 140 (Fox J) at 144; Trade Practices Commission v Service Station Association Ltd [1993] FCA 405; (1993) 44 FCR 206 (FC) at 230-231 (Lockhart J), 238 (Spender and Lee JJ).

140 The present case does not raise the issue of the undertaking of an obligation by one Tenderer and not by the others: the positions of all four Tenderers were relevantly identical.

141 The cases require that at least one party "assume an obligation" or give an "assurance" or "undertaking" that it will act in a certain way. A mere expectation that as a matter of fact a party will act in a certain way is not enough, even if it has been engendered by that party. In the present case, for example, each individual who attended the Meeting may have expected that as a matter of fact the others would return to their respective offices by car, or, to express the matter differently, each may have been expected by the others to act in that way. Each may even have "aroused" that expectation by things he said at the Meeting. But these factual expectations do not found an "understanding" in the sense in which the word is used in ss 45 and 45A. The conjunction of the word "understanding" with the words "agreement" and "arrangement" and the nature of the provisions show that something more is required. With respect, the first passage set out above from the judgment of Smithers J in Top Performance Motors, although addressing the term "arrangement", seems to me to describe appropriately that further necessary element of the "understanding" to which the provisions refer.’

[20] In accordance with the Explanatory Memorandum the word “arrangement” should be interpreted broadly. It certainly need not imply a formal let alone legally enforceable agreement between the two parties. However the expression must still be given some content. From the authorities it can be concluded that for an “arrangement” to exist one party must have assumed at least a moral obligation, or given an “assurance” or “undertaking” that it will act in a certain way.” [Endnotes not reproduced]

[29] In Hillie, the Full Bench was satisfied that there was no evidence to support the first instance finding that there was an arrangement between the applicant’s previous employer and the respondent involving a transfer of assets as contemplated by s.311(3) of the Act. It described the evidence concerning the new employer having the beneficial use of some assets of which the old employer previously had the beneficial use as “fairly sketchy” 5 and found that whatever arrangement existed for the new employer to take over the operation of the hotel in question was between the owner of the hotel and the new employer.

[30] In the Zabrdac 6 decision referred to by the Full Bench in Hillie at paragraph [19], Commissioner Bissett found there was no connection between the old employer and new employer as required by s.311(1)(d) of the Act because there was no arrangement between them with respect to the beneficial use of some or all assets of the old employer.

[31] In the case of Mr Crossin’s application, the evidence does not persuade me there is a connection between JB Enterprises and Tazzy Tyres pursuant to s.311(3) of the Act. For such a connection to exist, Tazzy Tyres would need to own or have the beneficial use of some or all of the assets that relate to or are used in connection to the transferring work that JB Enterprises owned or had the beneficial use of, “in accordance with an arrangement” between JB Enterprises and Tazzy Tyres. I am not satisfied there was an “arrangement” between JB Enterprises and Tazzy Tyres whereby Tazzy Tyres owns or has the beneficial use of some or all of the assets that JB Enterprises owned or had the beneficial use of that relate to or are used in connection to the transferring work. I base this on the following findings:

a) Mr Barnes had decided to shut down his business of his own volition. Mr Vasicek did not purchase it or make payment for goodwill or the like.
b) Mr Vasicek did not purchase or use any of Mr Barnes’ equipment or other assets, instead bringing in an entirely new set of tools and his own equipment.
c) The trading name, Tazzy Tyres, was not something Mr Vasicek obtained from JB Enterprises - he already owned it.
d) Mr Vasicek did not assume responsibility for the lease Mr Barnes had held over the premises but rather, negotiated a new lease, on new terms directly with Ms Ma, the property owner.
e) Mr Vasicek did not purchase the four-post hoist Mr Barnes left behind. While he made three or four payments of $900 to Mr Cox, this was pursuant to a hand shake agreement made directly with Mr Cox. In any event, the four-point hoist did not work and was never used in connection to the transferring work prior to its removal from the premises.

[32] In summary, I find there was no evidence that, in accordance with an arrangement between them, Tazzy Tyres owns or has the beneficial use of any assets that JB Enterprises owned or had the beneficial use of and that relate to or are used in connection with the transferring work.

[33] I am not satisfied there was a transfer of assets from JB Enterprises to Tazzy Tyres pursuant to s.311(3) of the Act that would establish a connection between them for the purposes of s.311(1)(d) of the Act. I therefore find that there was no transfer of business within the meaning of s.311 of the Act.

[34] As I am not satisfied that there was a transfer of business, the conditions of s.22(7) and therefore, s.22(5) of the Act are not satisfied and Mr Crossin’s service with JB Enterprises does not count. Mr Crossin therefore has not completed the minimum period of employment with Tazzy Tyres in order to be a person protected from unfair dismissal pursuant to s.382 of the Act.

[35] The unfair dismissal application of Mr Crossin must therefore be dismissed and an order to that effect will be issued with this decision.

DEPUTY PRESIDENT

Appearances:

Ms I Tiang for the Applicant.

Mr A Vasicek on behalf of the Respondent.

Hearing details:

2016.

Melbourne and Hobart (telephone hearing):

August 12.

 1   Transcript PN 181.

 2   Form F3 – Employer Response to unfair dismissal Application – Question 1.7.

 3 Section 383(a) of the Fair Work Act 2009 (Cth).

 4   [2013] FWCFB 1198.

 5 Ibid at [18].

 6   Peter Zabrdac v Transclean Facilities Pty Ltd [2011] FWA 4492.

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