James Ingram v Little Rock Consulting Services Pty Ltd
[2024] FWC 1270
•15 MAY 2024
| [2024] FWC 1270 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
James Ingram
v
Little Rock Consulting Services Pty Ltd
(U2024/3108)
| COMMISSIONER PERICA | MELBOURNE, 15 MAY 2024 |
Application for an unfair dismissal remedy
On 18 March 2024, Mr. James Ingram (Ingram) made an application to the Fair Work Commission under s 394 of the Fair Work Act 2009 (Cth.) (the Act) for a remedy, alleging he had been unfairly dismissed from his employment with Little Rock Consulting Services Pty Ltd (Consulting). Ingram seeks compensation.
Consulting has raised a jurisdictional objection alleging that Ingram’s employment did not meet the minimum employment period. Directions were issued on the question of whether Ingram met the minimum employment period prescribed by s 383 of the Act. Ingram and Consulting were directed to file an outline of argument and evidence on that question.
On 14 May 2024, the jurisdictional objection was heard in-person by way of Determinative Conference. Ingram attended with his support person. Ms. Shelly Biancon and Mr. Dean Biancon appeared for the Respondent.
For the following reasons, I am satisfied Ingram was a person who was protected from unfair dismissal within the meaning of s 382 of the Act.
BACKGROUND FACTS
Mr. and Ms. Biancon (the Biancons) have operated a civil contracting business which includes “the building of footpaths, dams and intricate and small engineering jobs”. They have operated this business for 32 years.
Up until 2021, the entire business, including assets and the employment of workers, was undertaken by Little Rock Consulting Services Pty. Ltd (ACN 096 379 412) (“Consulting”) The company search for Consulting shows that Ms. Biancon was a Director and Secretary of Consulting from 29 March 2001 until 28 November 2016. The shares in Consulting are held by Little Rock Properties Pty Ltd. The shares were previously held by Mr. and Ms. Biancon.[1]
In 2001, the accountant engaged by Consulting retired. The Biancons were searching for an accountant, and because of a cold canvas call, the Biancons engaged an accounting practice who advised them to set up a different company to manage the employees in the business.
The accountant had a shelf company named “One Off Industries” which would be used as the vehicle to manage the employees. The name of the shelf company was changed to “Little Rock Civil (Vic) Pty Ltd (ACN 636 618 534) (“Civil”). In her oral evidence, Ms. Biancon stated Civil “paid the employees, did superannuation and workcover”.
The company search of Civil indicates that as at 21 January 2021, Mr. Anthony McQuillan was both director and secretary of Civil. The one hundred ordinary shares in Civil were held by Anthony McQuillan. Ms. Biancon confirmed in her evidence that Mr. McQuillan was engaged in the accounting practice.
There is no dispute on 10 January 2022, when Ingram was first employed, he was employed by Civil. The Respondent filed a payslip on the “Little Rock” letterhead for the period 20 to 26 September 2023 which names Civil as his employer.[2]
On or around September 2023, the Biancons were concerned with the level of service they were receiving from the accounting practice who managed Civil. Around that time, the accounting practice told Ms. Biancon that Civil was “heading in a different direction and was no longer able to service [Consulting’s] needs”.[3] The Biancons were “notified seven days prior to the next payroll”.[4]
The Biancons decided that Consulting would become the vehicle which employed the workers in their business again. Consulting, in its submissions, sets out the steps it took in in late September 2023 to inform the employees of the change of employers:
“Each employee was advised, in the following days in person I asked them via mobile text to “stop into the office please and see me tonight before you go”, and they were each informed and given a chance to ask questions. Regardless of the situation, which at best I could only advise that we were, ‘given notice’, and that we were sorry for any inconvenience, but we would look after everyone and decided not to undertake another company to manage our employees. Little Rock Consulting Services PL, our ‘main’ and ‘original’ Company that has been active since 2008, would employ the remaining help. Everyone agreed, everyone was satisfied, we expedited the Tax File Number Transfers, including-James Ingram.[5]
Ingram, in his oral evidence, denied he had ever received a phone text or was advised in person of the change of employer. His evidence was he was advised by an employee a month later that the employer had changed on the pay slips.
The Biancons ensured there was total continuity of employment between the employment of Little Rock’s workers from Civil to Consulting. This is not disputed by Ingram. Consulting’s submissions note:
“We also transferred ALL employee entitlements to Consulting, regardless of the situation, including RDO’s and sick leave accrual. Which all have been paid to Mr. James Ingram.[6]”
At the determinative conference, Ingram and Consulting agreed that Ingram had been employed by Civil from 10 January 2022 until 30 September 2023, a period of around 20 months and 20 days.
Ingram was dismissed on 27 February 2024. The reason given by Consulting was redundancy, which Ingram disputes. Ingram was employed by Consulting from 1 October 2023 until 27 February 2024, a period of 4 months and 26 days.
The basis of Consulting’s jurisdictional objection is that Ingram had not worked the twelve-month minimum employment period with Consulting to qualify for protection from unfair dismissal under the Act.
RELEVANT LAW
When is a person protected from unfair dismissal?
Section 382 of the Act provides that a person is protected from unfair dismissal, at a time if, at that time:
(a)the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and
(b)…. [Emphasis added]
Minimum employment period and period of employment
Section 383 provides a definition of minimum employment period:
The minimum employment period is:
(a)….
(b)if the employer is a small business employer—one year ending at that time.
Section 384 defines “period of employment” as follows:
(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. [emphasis added]
then the period of service with the old employer does not count towards the employee’s period of employment with the new employer. [Emphasis added]
Meaning of service and continuous service and the effect of a transfer of employment
Section 22 defines “continuous service” as referred to in s 384(1) 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….”
Section 22(5) describes the effect of a transfer of employment on “continuous service”:
(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;
(b)… [emphasis added]
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:
(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.
(8)A transfer of employment:
(a)…
(b)is a transfer of employment between non‑associated entities if paragraph (7)(b) applies. [Emphasis added.]
What is a transfer of business?
Both ss 384(b)(i) and 22(7)(b)(i) refer to the transferring employee in relation to a “transfer of business”. The meaning of transfer of business is contained in s 311(1) of the Act as follows:
“(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). [emphasis added]
Section 311(5) sets out one such connection between the employers. That is, where the new employer ceases to outsource work to the old employer:
“(5)There is a connection between the old employer and the new employer if:
(a)…
(b)the transferring work is performed by those transferring employees, as employees of the new employer, because the new employer, …has ceased to outsource the work to the old employer”
CONSIDERATION
I accept the Respondent’s argument that as the directors and shareholders of Civil and Consulting had no relationship with one another, they were not associated entities for the purposes of the Act.
Under s 383, the minimum employment period for a small business employer is “one year”. Period of employment is defined in s 384 as “the period of continuous service the employee has completed with the employer at that time as an employee”.
The meaning of “continuous service” is expanded by s 22(5). If there is a transfer of employment, any period of service with the first employer counts as service with the second employer, and the time between the termination of the employment with the first employer and the start of employment with the second employer does not break continuous service.
Section 22(7) contains the conditions for a transfer of employment that must be satisfied where the employers are not associated entities. The conditions are the employee is a transferring employee in relation to a transfer of business from the first to the second employer; and the employers are not associated entities.
Section 384 explains the meaning of period of employment. Section 384(2) commences with the qualifier “However”. The subsections that follow in s 384(2) describe circumstances where the period of employment may be considered broken: s 384(2)(a) describes the limited circumstances where a casual employee can be regarded as having an unbroken period of employment; and s 384(2)(b) sets out circumstances where a transfer of business breaks a period of employment.
Under s 384(2)(b), the first condition is the employee is transferring from the first employer to the second employer “in relation to a transfer of business.” The second condition is the employers are not associated entities. The third condition is the “new employer has informed the employee in writing before the new employment started that the period of service with the old employer would not be recognised. If these three conditions are made out, then “the period of service with the old employer does not count towards the employee’s period of employment with the new employer.”
The effect of s 384(2)(b) is the period of employment for a transferring employee in relation to a transfer of business is not broken unless the second employer has given written notice to its employees that it does not recognise the service of the first employer.
Has there been a transfer of business between Civil and Consulting?
The question I must consider is:
has there been a transfer of business, as defined by s 311, between Civil to Consulting under ss 384(b)(i) and 22(7)(b)(i); and
has there been a transfer of employment for the purposes of s 22(5)?
Ms. Biancon gave evidence that Consulting was the employer and the holder of assets for their construction business until 2021.
The Biancons were advised by their accountants they should not have “all their eggs in one basket” and that employment of the workers should be undertaken by a different corporate entity. The Respondent decided to follow this advice and employed their workers through the new entity Civil, which was a renamed shelf company.
In September 2023, a decision was made to bring the employees back to be employed by Consulting. All entitlements were paid and employees had continuity of service between employment with Civil and employment with Consulting.
As a matter of plain English, the accounting advice in 2021 was to outsource the employment from Consulting to Civil. The decision to bring the employees back “in house” in late September 2023 was to insource. Around early October 2023, Consulting ceased outsourcing employment to Civil within the plain meaning of s 311(5)(b). There is therefore a “connection” between the old employer and the new employer for the purposes of s 311(1)(d).
The employment of Little Rock’s employees by Civil was terminated under s 311(1)(a). The employees were immediately engaged by Consulting under s 311(1)(b). The work performed by the employees was substantially the same (and was therefore transferring work) under s 311(1)(c). For reasons explained in the paragraph above, there is a connection between Civil and Consulting under s 311(1)(d). It follows that what occurred between Civil and Consulting around early October 2023 was a transfer of business under s 311.
As there is a transfer of business, the only way a “transferring employee” would not have continuity of service would be if Civil had informed the employees in writing that the period of employment with Consulting would not be recognised as required by s 384(2)(b)(iii).
Consulting did not provide this written advice. Ms. Biancon did the opposite. She assured the workers that there would be continuity of employment and their accruals and entitlements would continue under the new employment arrangements.
The fact there was a transfer of business is relevant to whether Ingram was the subject of a transfer of employment for the purposes of s 22(7). Ingram has met conditions under s 22(7). He was a transferring employee in relation to a transfer of business and Civil and Consulting are not associated entities. As there was a transfer of employment under s 22(7), any period of service that Ingram had with Civil counts as service with Consulting by operation of s 22(5).
The period of employment includes both the time Ingram was employed by Civil and Consulting. This counts as continuous service by operation of s 384, as Consulting did not give written notice that it would not recognise the service of employees by Civil as required by s 384(2)(b)(iii). The period of employment is treated as unbroken.
Ingram’s period of employment under s 384 includes the 20 months and 20 days which he was employed by Civil together with the 4 month and 26 days he was employed by Consulting. His total period of employment is therefore 2 years, one month and 17 days.
It follows that Ingram’s period of employment for the purposes of the Act is well over the twelve-month minimum employment period prescribed by 383(b).
CONCLUSION
As I have found the period of employment of Ingram was over twelve months, the jurisdictional objection of Consulting based on the minimum employment period is dismissed. The application will proceed. Directions will issue in due course.
COMMISSIONER
Appearances:
Mr. James Ingram, Ingram, for himself
Ms. Shelly Biancon for the Respondent
Hearing details:
14 May 2024
Melbourne
[1] Digital Court Book at pp. 17-18.
[2] DCB 27
[3] DCB 42
[4] ibid
[5] ibid
[6] DCB at 42
Printed by authority of the Commonwealth Government Printer
<PR775036>
0
0
0