Jessica Hardy v JMH Wholesale Pty Ltd

[2020] FWC 4003

[2020] FWC 4003

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Jessica Hardy
v
JMH Wholesale Pty Ltd
(U2020/7839)

DEPUTY PRESIDENT COLMAN MELBOURNE, 30 JULY 2020

Application for an unfair dismissal remedy – minimum employment period – transfer of business – whether service with old employer counts as service with new employer

[1] This decision concerns an application by Ms Jessica Hardy for an unfair dismissal remedy pursuant to s 394 of the Fair Work Act 2009 (Act). Ms Hardy was employed as an operations coordinator on a full time basis by JMH Wholesale Pty Ltd (JMH Wholesale) from 2 September 2019 until the termination of her employment for reason of redundancy, which the company says occurred on 22 May 2020. Ms Hardy says that she continued to do certain work until 5 June 2020, and that her employment ended on this date. As will become apparent, the disagreement about the date of dismissal is inconsequential for the purposes of this decision, because it is clear that Ms Hardy was employed by JMH Wholesale for more than six months and fewer than 12 months.

[2] JMH Wholesale objects to the application on the jurisdictional ground that Ms Hardy has not served the minimum employment period, which, because the company is a small business, is one year. Ms Hardy says that forover ten years she worked for JMH Consolidated Pty Ltd (JMH Consolidated), a company acquired by JMH Wholesale in June 2019, and that this period should be included in her period of service with JMH Wholesale.

[3] Ms Hardy’s unfair dismissal application was listed for a jurisdictional hearing before me on 24 July 2020 in relation to the question of whether she had served the minimum employment period. Ms Hardy appeared and gave evidence for herself. Mr Rajesh Patel, the director of JMH, appeared and gave evidence for the company. There are two questions to be determined. First, what is the minimum employment period in this case? Secondly, has Ms Hardy served that period?

The minimum employment period

[4] The minimum employment period that a person must have served with an employer in order to be able to bring an unfair dismissal application is six months, or, where the employer is a small business employer, one year (s 383). Section 23 of the Act defines a small business employer as one which, at the relevant time, employs fewer than 15 employees. This number includes casual employees employed on a regular and systematic basis. It also includes the person who has been dismissed, as well as the employees of any associated entity.

[5] Mr Patel gave evidence that at the time of Ms Hardy’s dismissal the company employed eight employees, including Ms Hardy. The names of these employees were listed in the company’s submissions. I understand these numbers to relate to the time of dismissal contended for by the company, which is 22 May 2020. There is no evidence of the company employing any other persons, either at that time or on 5 June 2020. Mr Patel also said that JMH Wholesale did not have any associated entities. Ms Hardy did not disagree with Mr Patel’s evidence about these matters, and I accept it.

[6] I find that JMH Wholesale was a small business employer at the time of Ms Hardy’s dismissal and that the minimum employment period that Ms Hardy must have served in order to bring her unfair dismissal application is one year.

Ms Hardy’s period of service

[7] Ms Hardy was employed by JMH Wholesale for some nine months. However, she was employed by JMH Consolidated for ten years. If her service with JMH Consolidated counts as service with JMH Wholesale, Ms Hardy has clearly served the minimum employment period. If it does not count, she has not served the minimum period and her unfair dismissal application must be dismissed.

[8] Section 22(1) of the Act states that a period of service is a period during which the employee is employed by the employer, subject to certain excluded periods set out in other provisions. Section 22(5) states that, if there is a ‘transfer of employment’, any period of service of an employee with the first employer counts as service of the employee with the second employer. ‘Transfer of employment’ is defined in s 22(7). Relevantly, s 22(7)(b) states that a transfer of employment occurs where the employee is ‘a transferring employee in relation to a transfer of business from the first employer to the second employer’; and the first employer and the second employer are not associated entities when the employee becomes employed by the second employer.

[9] JMH Consolidated and JMH Wholesale are not associated entities. The question is then whether Ms Hardy is a ‘transferring employee’ in relation to a ‘transfer of business’ from JMH Consolidated to JMH Wholesale. These expressions are defined in s 311 of the Act.

[10] Section 311(1) sets out when a transfer of business occurs. It states:

“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.”

[11] Relevantly for this case, there is a ‘connection’ between the old employer and the new employer for the purpose of s 311(1)(d) if there is a transfer of assets between them. Section 311(3) states that such a connection exists if, in accordance with an arrangement between the old employer and the new employer, the new employer owns or has the beneficial use of some or all of the assets, whether tangible or intangible, of the old employer, and that relate to or are used in connection with the transferring work (s 311).

[12] Mr Patel gave evidence that JMH Wholesale purchased the business of JMH Consolidated with effect from 3 June 2019. Specifically, he said that JMH Wholesale purchased the customer list and the inventory of JMH Consolidated and assumed its obligations under a commercial lease. At around this time, a number of employees of JMH Consolidated were offered and accepted employment with JMH Wholesale. These included warehouse employees, and a Mr Christopher Ellis, who was employed as the operations co-ordinator. None of this evidence of Mr Patel is contentious.

[13] It was common ground that Ms Hardy became an employee of JMH Warehouse on 2 September 2019, and that she was employed pursuant to a contract of employment dated 27 August 2019, a copy of which was provided to the Commission with the company’s submissions. Mr Patel gave evidence that in late August 2019, Mr Ellis left the employment of JMH Wholesale for health related reasons. Ms Hardy said the she had believed Mr Ellis to have been made redundant however Mr Patel’s account of the end of Mr Ellis’ employment was detailed and convincing and I accept it.

[14] Mr Patel said that, when Mr Ellis left JMH Wholesale, he had a vacancy for the role of operations coordinator, and that he offered this position to Ms Hardy and she accepted it. Ms Hardy’s evidence was that when she commenced employment at JMH Wholesale, she continued to perform the work she had previously undertaken at JMH Consolidated in her role of ‘office manager’, but that she now had a range of additional duties, including responsibilities for invoicing, logistics, dispatch, and working with the warehouse. She said that it was a different role. I accept this evidence.

[15] Applying the facts above to s 311, I make the following findings. First, there was a ‘connection’ between JMH Consolidated and JMH Wholesale for the purpose of s 311(1)(d) because there was an asset transfer from the former to the latter on 3 June 2019. Secondly, the employment of Ms Hardy with JMH Consolidated ended. Thirdly, within three months of the termination of her employment with JMH Consolidated, Ms Hardy became an employee of JMH Wholesale. The elements of a transfer of business in s 311(1)(a), (b) and (d) are satisfied.

[16] However, I find that the element in s 311(1)(c) is not satisfied. It is not the case that ‘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’. It is not sufficient that some of the work performed for the new employer is the same or substantially the same as that performed for the old employer. The work must be considered as a whole. Although Ms Hardy continued to do the work of her office manager role at JMH Consolidated, she now had additional substantive tasks, in a different position. She had been the office manager at JMH Consolidated. Now she was the operations coordinator for JMH Wholesale. The totality of the work she performed for JMH Wholesale was not the same, or substantially the same, as the work she had performed for JMH Consolidated. She acknowledged that this was a different role. Mr Patel said, and I accept, that Ms Hardy was responsible for all the value chain from when the order is received to the time the goods are dispatched. This work was qualitatively different from that of the work Ms Hardy performed for the old employer.

[17] I therefore conclude that Ms Hardy is not a transferring employee for the purpose of s 311(2), and that accordingly there was no ‘transfer of employment’ from JMH Consolidated to JMH Wholesale in relation to Ms Hardy for the purpose of s 22(7), and that for this reason, her service with JMH Consolidated does not count as service with JMH Wholesale under s 22(5).

[18] It is not necessary for me to consider the company’s further contention that it informed Ms Hardy in writing before she became an employee of JMH Wholesale that her period of service with the old employer would not be recognised (see s 384(2)(b)).

[19] Because Ms Hardy has not served the minimum employment period, the Commission cannot proceed to consider the merits of her application. I appreciate Ms Hardy’s substantive concern that the role she performed for JMH Wholesale was an important one and that the work of this role is still required. But I also note Mr Patel’s position that this role no longer exists and that the tasks associated with it have been distributed to other employees. I make no findings or conclusions about these matters, because it is not necessary or appropriate to do so. I would simply note that, depending on the circumstances, a position can legitimately be made redundant, despite the fact that its constitutive tasks still need to be done and will be redistributed. It is not uncommon for this to occur in difficult economic times. In this regard, Mr Patel said that the business had suffered a reduction of more than 80% in revenue.

Conclusion

[20] For the above reasons, Ms Hardy has not served the minimum employment period of 12 months. Her unfair dismissal application must therefore be dismissed.

DEPUTY PRESIDENT

Appearances:

J. Hardy for herself
R. Patel for JMH Wholesale Pty Ltd

Hearing details:

2020
Melbourne
24 July

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