Damian Donnelly v Tcig Holdings Pty Ltd T/A Lilydale Larder

[2018] FWC 503

[2018] FWC 503

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Damian Donnelly
v
TCIG Holdings Pty Ltd T/A Lilydale Larder
(U2017/12550)

COMMISSIONER WILSON MELBOURNE, 25 JANUARY 2018

Application for unfair dismissal remedy; small business sold from one proprietor to another; whether Applicant has served the minimum employment period.

[1] This decision involves the jurisdictional question of whether Damian Donnelly is a person protected from unfair dismissal within the meaning of the Fair Work Act 2009 (the Act). The term is defined in s.382 to be a person who has completed the minimum employment period and is covered either by a modern award or enterprise agreement, or whose annual rate of earnings was less than the high income threshold.

[2] There is no dispute either that Mr Donnelly’s employment was covered by a modern award, or that the entity from which Mr Donnelly was dismissed was at the relevant time a small business employer, with the Respondent submitting in its response to the Commission that when he was dismissed it employed 10 people. The combination of s.382(a) and s.383(b) mean that to be a person protected by unfair dismissal Mr Donnelly must have served a minimum employment period of one year immediately before his dismissal.

[3] The particular dispute to be resolved is whether Mr Donnelly’s employment was longer than one year.

[4] The Respondent, TCIG Holdings Pty Ltd trading as the Lilydale Larder (TCIG Holdings), operates a tavern in Lilydale, in northern Tasmania, in the Launceston region. It acquired the business of the Lilydale Larder on 16 November 2016 and the parties accept that a termination of employment notified to Mr Donnelly on 4 November 2017 took effect on 12 November 2017. On the analysis of the Respondent, Mr Donnelly is a few days short of having completed the minimum employment period and as a result he is not a person protected from unfair dismissal.

[5] TCIG Holdings advance two main arguments in relation to its jurisdictional objection. The first is that Mr Donnelly is not a transferring employee within the meaning of the Act, which by corollary means that service as an employee with the entity that operated the Lilydale Larder prior to 16 November 2016 is not counted as continuous service.

[6] The second of the submissions put by the Respondent is that, in any event, the casual nature of Mr Donnelly’s employment with TCIG Holdings after it took over the business means he did not work on a regular and systematic basis and that he had no reasonable expectation of continuing employment, also on a regular and systematic basis.

LEGISLATION

[7] The legislative provisions relevant to determination of TCIG Holdings’ jurisdictional objection are s.384 (Period of Employment) which refers to the periods of service to be counted or excluded in determining the minimum employment period; and s.311 (When does a Transfer of Business Occur) which, amongst other things, defines the meaning of a transferring employee, being a term used within s.384. These sections are in the following terms:

“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:

(a) a period of service as a casual employee does not count towards the employee’s period of employment unless:

(i) the employment as a casual employee was on a regular and systematic basis; and

(ii) during the period of service as a casual employee, the employee had a reasonable expectation of continuing employment by the employer on a regular and systematic basis; and

(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.”

“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.

Old employer outsources work to new employer

(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.

New employer is associated entity of old employer

(6) There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employed by the new employer.”

[8] With respect to s.311(1), the evidence allows the findings that Mr Donnelly’s employment was terminated immediately prior to TCIG Holdings taking over the business and that he was employed by TCIG Holdings within 3 months of it commencing as the owner. TCIG Holdings concede that there is the requisite connection between it and the former owners for a finding to be made pursuant to s.311(1)(d). In respect of s.311 generally, the matter in dispute is whether Mr Donnelly’s work met the requirement in s.311(1)(c) that it be the same, or substantially the same, as the work that he performed for the former employer.

[9] In respect of s.384, the matter in dispute is whether his employment with TCIG Holdings as a casual employee was on a regular and systematic basis, with him having a reasonable expectation of continuing employment.

FURTHER BACKGROUND

[10] Mr Donnelly commenced work with what was then the Lilydale Tavern in 2009 as a casual bar and bottle shop attendant. At the time the business was owned by Jim Babos. In October 2011 the ownership of the business changed to Hirst Holdings, an entity associated with Mark and Sarah Hirst who changed the name of the business to the Lilydale Larder. 1 The change in ownership was on 7 November 2012 and the outgoing proprietor suggested Hirst Holdings offer Mr Donnelly several casual shifts in the bar.2

[11] It is said by Mr and Mrs Hirst, in an unsworn statement to the Commission, that they offered Mr Donnelly full-time employment as a bar attendant from 1 January 2015, 3 although he contests that this never actually occurred. In this regard Mr Donnelly puts forward that during this time he worked casually, albeit that his work involved a substantial number of hours with a regular pattern over each fortnight. Notwithstanding this basis of engagement, and apparently after the commencement of a manager, Mr Donnelly’s hours steadily reduced.4 Mr Donnelly puts forward in connection with the reduction in hours, but with a completely different timeframe to that referred to by the Hirsts, that in response to the reduction in hours and after discussing the matter with his employer he “was advised that nothing could be done and I resigned”, with him putting forward that this would have been around late 2012, albeit that he was re-engaged within seven days of the resignation.5

[12] The business was sold again with effect from 16 November 2016. 6 The evidence before the Commission is that there were discussions between the Hirsts and Mr Donnelly about the forthcoming sale. The Hirsts put forward that they said to employees, including Mr Donnelly, that they were unable to guarantee ongoing employment since there was to be a complete sale of the business to new owners and a new management team would run the business.7 The new owners advertised a range of full-time and casual positions, with the Hirsts putting forward that Mr Donnelly was not offered an employment contract by the new owner “as his full time role was undertaken by the new manager”.8

[13] On 23 November 2016 Mr Donnelly was paid his accrued employment entitlements in full by Hirst Holdings 9 which, it is submitted, was a payment only for time worked and accrued annual leave.

[14] Mr Donnelly says about this period that in early November 2016 he was asked to attend a meeting with Mrs Hirst and two of the incoming owners of the business at which his forthcoming holidays were discussed, as was the change of ownership to the business and he “was advised that my ongoing employment was guaranteed with Lilydale Larder, however it would be as a casual employee”. 10 While he was not happy about the situation he felt he had no option but to accept; he then proceeded on holidays, returning after the sale of business had occurred. Mr Donnelly then says that on return from his holidays he contacted his former employer, Mrs Hirst, and advised her that he had returned and was available for work, after which he was provided with his first shift with TCIG Holdings within three days of having made the call to Mrs Hirst. Following his recommencement he worked regular and consistent shifts between November 2016 and July 2017, albeit that his hours began to reduce in May 2017.11

[15] In July 2017 Mr Donnelly’s arrangements changed again with it being proposed that he change to full-time employment. The matter was agreed and a written contract of employment was entered into. 12 In the period of July 2017 to 12 November 2017 Mr Donnelly’s hours were full-time; however on 4 November 2017 he was advised that his employment was being terminated for reason of redundancy, with the effective date of his termination being 12 November 2017.13

[16] Part of Mr Donnelly’s contentions in his unfair dismissal application is that the purported redundancy was not a genuine redundancy, with it being said that the work he performed still exists, and that the consultation requirements upon the Respondent from the modern award were not met. It is further said by Mr Donnelly that he believes his dismissal to be actually because of concerns held about his performance, with those matters never having put been put to him for response.

[17] While the proper characterisation of Mr Donnelly’s employment after TCIG Holdings took over the business is in dispute, it is not in contention that the work of Mr Donnelly prior to 16 November 2016 was on a regular and systematic basis and that, other than for reason of the change of ownership, he had a reasonable expectation of continuing employment on a regular and systematic basis.

[18] TCIG Holdings argue that having taken over the business on 16 November 2016 Mr Donnelly progressed on a holiday with no expectation of employment once he returned, and that although he was subsequently offered employment that was under a separate arrangement to that with Hirst Holdings. Mr Donnelly puts forward that once he returned from his holiday and he was ready to work again he contacted one of the former owners, Mrs Hirst, and that within three days of the phone call with her he had been engaged for the first time by TCIG Holdings. Both parties agree that Mr Donnelly did not work again at the Lilydale Larder until 18 December 2016.

CONSIDERATION

[19] As referred to above, TCIG Holdings argue that Mr Donnelly is barred from making an unfair dismissal application for either or both of two reasons; that he is not a transferring employee from the former operator of the business to the current; and that his employment after it took over the business has been anything but regular and systematic with a reasonable expectation of continuing employment.

[20] TCIG Holdings do not argue that it informed Mr Donnelly in writing before the new employment started that his period of service with the former employer, Hirst Holdings, would not be recognised (s.384(2)(b)(iii)) or that there is not a connection between the old employer and the new employer (s.384(3)). No party puts forward that ss.384(4), (5) or (6) have relevance to this matter.

[21] As part of its early case the Respondent appeared to rely upon the contract of sale between it and Hirst Holdings which led to acquiring the business, with it being put forward that the contract required the termination of employees before completion of the sale. In itself the term is not to be taken to displace the legislative tests of the Act. In any event, not only does the contract require determination before completion of the sale but it also specifies that “the Purchaser may re-employ from completion any employee of the Business”.

[22] Two questions require determination for the purposes of this decision in assessing whether Mr Donnelly had completed the minimum employment period:

•  Has there been a transfer of business from Hirst Holdings to TCIG Holdings? and

•  Is Mr Donnelly’s casual service with TCIG Holdings to be counted toward the minimum employment period?

Has there been a transfer of business from Hirst Holdings to TCIG Holdings?

[23] The proposition that Mr Donnelly is not a transferring employee rests upon whether the requirement within s.311(1)(c) has been met, to the effect that for there to be a transfer of business the work performed by him for the new employer is the same or substantially the same as with the former employer.

[24] The argument in respect of this matter is largely the contention that under Hirst Holdings, Mr Donnelly worked as a full-time bar and bottle shop manager with that status changing to that of a casual bar employee after work commenced with TCIG Holdings. Mr Donnelly argues that the additional duties he performed as a bar and bottle shop manager were somewhat slight, taking not much longer than one hour per week and that the main distinction between the duties that he performed before and after the sale was that prior to working for TCIG Holdings he would order product for the tavern and bottle shop. The Respondent does not agree with this contention, putting forward that there was a difference of some substance between the two positions.

[25] After consideration of all the material before the Commission, I am satisfied that the work that Mr Donnelly performed for TCIG Holdings was substantially the same as the work he performed for Hirst Holdings. It is not in dispute that both businesses were small, operating a relatively small entertainment venue in a regional community, employing no more than five people (at least under TCIG Holdings’ ownership).

[26] TCIG Holdings’ argument is that Mr Donnelly’s work changed materially before and after the sale and that he was no longer the person in charge of the bar and bottle shop. Further, he was no longer responsible for ordering and the number of hours he worked was reduced. TCIG Holdings also rely on the fact that it was said to Mr Donnelly at the time of the change of ownership that the new owner planned to appoint one of its partners “as Lilydale Larder Operations Manager under the new ownership and would be working full-time in the bar and bottleshop (effectively replacing Damian’s role with Hirst Holdings)”. 14 It puts forward that the totality of this situation means that the work is neither the same nor substantially the same work as he performed for Hirst Holdings.

[27] Mr Donnelly’s view, which I accept, is that the main part of the work he performed was essentially the same. The size of the business and the absence of cogent evidence on the subject draw me to the conclusion that while it cannot by any means be said that the work before and after was the same, that it would also stretch credibility to suggest that it was not substantially the same. Clearly there are differences between the two roles, but in the scale of the business concerned, it is able to be found that the work was substantially similar.

[28] As a result I am satisfied that the test within s.311(1)(c) is met by Mr Donnelly and that, along with the other factors within s.311, he is a transferring employee within a transfer of business.

Is Mr Donnelly’s casual service with TCIG Holdings to be counted toward the minimum employment period?

[29] The second factor argued by TCIG Holdings as being an impediment to the progression of Mr Donnelly’s unfair dismissal application is that during the period of service he has had with them, being since 18 December 2016, he was first employed as a casual employee, until the parties agreed to change his status to full-time employee, having entered into an employment contract detailing the terms and conditions of his employment, with effect from 17 July 2017.

[30] It has been held in relation to predecessor legislation, in which there was also a need to find employment on a “regular and systematic” basis in order for a casual employee to be entitled to make an unfair dismissal application, “that it is the ‘engagement’ that must be regular and systematic; not the hours worked pursuant to such engagement”. 15

[31] Further, the Full Bench has made plain that the enquiry in matters such as this is an enquiry as to the whole of the period of employment, with an established sequence of engagements being capable of being considered continuous service, with that continuous service being broken only when one party makes it clear to the other by words or actions that there will be no further engagements. I take into account and apply the reasoning of the Full Bench in Shortland v Smiths Snackfood:

“As a matter of the common law of employment, and in the absence of an agreement to the contrary, each occasion that a casual employee works is viewed as a separate engagement pursuant to a separate contract of employment. Casual employees may be engaged from week to week, day to day, shift to shift, hour to hour or for any other agreed short period. In this sense no casual employee has a continuous period of employment beyond any single engagement. Moreover, it is common for a casual employee to transition between a period in which their engagements with a particular employer are intermittent and a period in which their engagements are regular and systematic and vice versa. It is against that background that s 384 must be construed.

The criteria in s 384(2)(a) make it clear that s 384 does not proceed on the basis that a casual employee’s period of employment for the purposes of the unfair dismissal remedy starts and ends with each engagement as understood in the common law of employment.

Moreover, it is more than tolerably clear that s 384 is concerned with how an employee’s period of employment is calculated for the purposes of s 382(a). Section 384(2) draws a distinction between a period of service and a period of employment. It also draws a distinction between a period of continuous service and a period of service: a period of continuous service can be made up of a series of periods of service, some of which count towards the period of continuous service (ie. where the conditions in s 384(2)(a)(i) and (ii) are met) and some of which do not (ie. where one of the conditions in s 384(2)(a)(i) or (ii) is not met). It is clear from the language of s 384(2) that an employee may have series of contiguous periods of service with an employer that may count towards a single period of employment with that employer. Any given period of service in such a contiguous series of periods of service will count towards the employee’s period of employment only if the requirements in s 384(2)(a)(i) and (ii) are met. Section 384(2) is concerned only with determining which periods of service in such a contiguous series count toward the employee’s period of employment with the employer for the purposes of s 382(a).

Continuous service by a casual employee who has an established sequence of engagements with an employer is broken only when the employer or the employee make it clear to the other party, by words or actions that there will be no further engagements. The gaps between individual engagements in a sequence of engagements should not be seen as interrupting the employee’s period of continuous employment within the meaning of s 384. In particular, a period of continuous service within the meaning of s 384(1) is not to be seen as broken by a period of “leave” or an absence due to illness or injury.” 16 (original emphasis)

[32] In relation to the current legislation, and as is relevant to this matter, in order to establish the requisite regular and systematic relationship there must be sufficient evidence to establish that a continuing relationship between the employer and the employee has been established. 17 There is a requirement to examine the facts in each case, and:

“[75] …that, if the number of hours worked is small and the gaps between days and times worked is long and irregular this means that there needs to be other evidence that the employment of a casual is regular and systematic. Conversely, if there is a clear pattern or a roster for the hours and days worked then this would be strong evidence of regular and systematic employment.

[76] In situations where there is not a clear pattern or roster of hours and days worked or a clear agreed arrangement between the employer and employee, then evidence of regular and systematic employment can be established where:

•  The employer regularly offers work when suitable work is available at times when the employer knows that the employee has generally made themselves available; and

•  Work is offered and accepted sufficiently often that it could no longer be regarded as simply occasional or irregular.” 18

[33] Data for the hours worked by Mr Donnelly was provided by TCIG Holdings for the whole of the period 18 December 2016 to 17 July 2017. In that time, there were three weeks in which Mr Donnelly’s weekly hours were zero, and six weeks in which he worked less than 20 hours in the week (with each of those weeks being not less than 12 hours). All the other weeks recorded hours in excess of 20 hours worked in the week.

[34] From the evidence before the Commission, Mr Donnelly’s engagement was plainly regular and systematic; he worked many Mondays, Thursdays and Fridays and for much of the period worked the second Saturday as well. In the latter part of the period, from mid-May 2017, he routinely worked on Wednesdays and Sundays and some Tuesdays as well.

[35] There is no evidence that at any time any party made it clear to the other that there would be no further engagement.

[36] Analysis of the time records of Mr Donnelly over the period 18 December 2016 to 17 July 2017 allows a finding to be made that the work he performed for TCIG Holdings was both regular and systematic. For much of the time Mr Donnelly worked for TCIG Holdings in the period in question there is a clear enough pattern or roster of hours and, overall, work was offered and accepted sufficiently often for it to no longer be the case that it could be regarded as simply occasional or irregular, if it ever could have been. It cannot be said from this material that he did not have an expectation of continuing employment on a regular and systematic basis.

[37] As a result of the foregoing analysis I am satisfied that Mr Donnelly has completed a period of employment of at least the minimum employment period, taking into account his status as a transferring employee and his overall continuous service.

[38] Accordingly Mr Donnelly’s application may proceed. It will now be referred back to the Commission’s Unfair Dismissal Case Management Team for progression in the usual way.

COMMISSIONER

Appearances:

Ms J Lenthall, paid agent, needHRnow, for the Applicant.

Ms B Frake, solicitor, BDF Law, for the Respondent.

Hearing details:

2018.

Melbourne (by telephone):

19 January.

Final written submissions:

Applicant: 22 January 2018.

Respondent: 23 January 2018.

 1 Witness Statement of Damian Donnelly [7].

 2 Statement of Mark and Sarah Hirst [2].

 3 Ibid [19].

 4 Witness Statement of Damian Donnelly [16].

 5   Ibid [18]-[21].

 6 Email from Mike Walsh, 23 December 2017; Statement of Mark and Sarah Hirst [27].

 7   Statement of Mark and Sarah Hirst [23]–[24].

 8 Ibid [25].

 9 Ibid [33].

 10 Witness Statement of Damian Donelly [29].

 11   Ibid [32]-[35].

 12 Ibid [39].

 13   Ibid [41]-[42].

 14 Statement of Mark and Sarah Hirst [23].

 15   Yaraka Holdings Pty Ltd v Giljevic [2006] ACTCA 6, (2006) 149 IR 339 [65].

 16   [2010] FWAFB 5709, (2010) 198 IR 237 [10]–[13].

 17   Ponce v DJT Staff Management Services Pty Ltd[2010] FWA 2078 [66].

 18   Ibid.

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