Mr Laurence Farrugia v Building Technology Integrators Pty Ltd

[2011] FWA 1285

[2011] FWA 1285

FAIR WORK AUSTRALIA

DECISION

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

Mr Laurence Farrugia
v
Building Technology Integrators Pty Ltd
(U2010/14769)

SENIOR DEPUTY PRESIDENT HAMBERGER SYDNEY, 14 MARCH 2011

Jurisdictional objection - whether applicant protected from unfair dismissal - whether completed minimum employment period - whether transfer of business.

[1] On 6 December 2010, Mr Laurence Farrugia (the applicant) filed an application for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (the Act).

[2] The application concerns the termination of Mr Farrugia’s employment from Building Technology Integrators Pty Ltd (BTI or the respondent) on 26 November 2010, where he was employed as a Client Services Manager. His employment at BTI commenced on 18 December 2009.

[3] Prior to the applicant’s employment with BTI, he was both the Managing Director and an employee of Austcoms Group (NSW) Pty Ltd (Austcoms). This company was placed into liquidation on 18 December 2009 and the applicant’s employment came to an end.

[4] On 23 December 2010, the respondent filed a jurisdictional objection to the application on the basis that they were a small business employer at the time of the applicant’s dismissal and alleged that the applicant had failed to complete the requisite minimum period of employment for protection from unfair dismissal.

[5] I heard the matter on 25 February 2011 to determine the jurisdictional issue. At the hearing, Mr Farrugia appeared unrepresented and the respondent was represented by Mr J Murray.

[6] This decision will deal with two questions pertaining to the larger jurisdictional issue that arose for determination at the hearing of the matter. The first is whether the respondent was a small business at the time of the applicant’s termination of employment, and the second is whether the applicant is able to include his prior service with Austcoms in the period of his employment with the respondent by virtue of establishing that a transfer of business occurred.

Relevant legislative provisions

[7] Division 2 of Part 3-2 of the Act outlines the relevant provisions to this application:

“Division 2 - Protection from unfair dismissal

382 When a person is protected from unfair dismissal

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) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

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.

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.”

[8] Section 23 of the Act then provides the following definition of a small business employer:

“(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.

(2) For the purpose of calculating the number of employees employed by the employer at a particular time:

(a) subject to paragraph (b), all employees employed by the employer at that time are to be counted; and

(b) a casual employee is not to be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis.

(3) For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.

(4) To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee’s employment, the employees that are to be counted include (subject to paragraph (2)(b)):

(a) the employee who is being dismissed or whose employment is being terminated; and

(b) any other employee of the employer who is also being dismissed or whose employment is also being terminated.”

[9] To determine whether a transfer of business occurred, FWA is to consider the following:

“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.”

[10] To determine whether the applicant has standing to make an application for an unfair dismissal remedy, ss.382(a) and (b) of the Act must be satisfied. It was not contested by either party that the applicant’s employment was covered under a modern award at the time of the termination of his employment from BTI. The issue in contention is whether the applicant has completed the requisite minimum period of employment under s.382(a).

[11] In dealing with the minimum period of employment required under the Act, the respondent submitted that BTI was a small business employer with a total of 12.5 staff in its employ at the time that notice of termination was given to the applicant. 1

[12] Mr Farrugia initially contested this evidence on the basis that the names of some employees, whom he failed to identify, had been excluded from the calculations provided by the respondent. In the absence of any further evidence in support of the applicant’s challenge, I rely upon and proceed on the basis that the respondent has accurately represented the number of full-time employees at BTI and that it operated as a small business at the time of the applicant’s termination of employment.

[13] Following this, in accordance with s.383(b), Fair Work Australia (FWA) must be satisfied that the applicant has completed at least one year of service with their employer. The respondent has alleged that the applicant has failed to complete the minimum period of service with BTI, and further submits that the applicant is unable to count his service at Austcoms as part of his service at BTI as there was no transfer of business.

[14] In respect of this issue, the Act specifies that a period of service with the old employer will not be counted towards the employee’s period of employment with the new employer if the factors set out in ss.384(2)(b)(i)-(iii) are met. It is clear from the evidence that the relevant companies were not associated entities. The parties did not contest that the respondent failed to inform the applicant that his previous service of employment with Austcoms would not be recognised by BTI.

[15] For the purposes of determining whether the applicant is a transferring employee in relation to a transfer of business from Austcoms to BTI, FWA must have regard to the factors that are outlined in ss.311(1)(a)-(d) of the Act. I will now deal with those factors in turn.

[16] It was not contested by the parties that the applicant’s employment with Austcoms ceased and subsequent employment with BTI commenced on 18 December 2009. I am therefore satisfied that the requirements under ss.311(1)(a) and (b) have been met.

[17] In relation to s.311(1)(c), the evidence of the applicant was that he was engaged as a Client Services Manager at BTI, and previously as Managing Director of Austcoms. Despite an obvious change in title, the applicant maintained that the work he performed at both companies was similar. The applicant explained the nature of his duties at each company in the following manner:

“PN331 ... At BTI, what was your role there? You were client relationship manager or - - - ? --- It was a client services role, but that was just a title.

PN332 What did you actually do? --- I pretty much did the same thing that I did in BTI - in Austcoms Group New South Wales as I did in BTI.

PN333 Well, can you expand on that? --- Well, I estimate work, I chase clients, I invoiced, I liaised with the accounts girl, I signed - I approved payments. I was signatory on the cheque account.

PN334 I mean, you didn’t do any of the hands on electrical work? --- Yes, I did. I was called out - at times I was called out to do service calls at night.

PN335 At BTI? --- At BTI.

PN336 Did you ever do that at Austcoms? --- Yes I Did, for Malara Council.”

[18] The evidence of the respondent was presented by Mr Kevin Morgan, Operations Manager of BTI. Prior to his employment at BTI, he was the Operations Manager at a company known only as “Firesec”, which was said to have operated from the same premises as Austcoms. For this reason, Mr Morgan said that he was familiar with the work that the applicant had previously performed at Austcoms.

[19] According to the respondent, Mr Farrugia, as the Managing Director of Austcoms, was responsible for a range of high-level management duties, including corporate governance, business direction and development, directing the project manager and had little to do with the provision of “hands-on” electrical installation. 2 The respondent submitted that these duties differed to those the applicant performed at BTI, where he was primarily responsible for the management of existing clients and customer relationships. He also did not carry out electrical installation services in this role.3

[20] The respondent further submitted that the work performed by each company was different, given that Austcoms provided predominantly electrical installation services on larger construction sites and BTI provided a range of multi-disciplinary services, such as building automation, energy management and electrical installation on smaller existing sites.

[21] The Explanatory Memorandum to the Fair Work Bill 2008 provides the following:

“1217.            Under paragraph 311(1)(c), the transferring employee must perform the same, or substantially the same, work for the new employer as she or he performed for the old employer.  It is intended that this provision not be construed in a technical manner.  It recognises that, in a transfer of business situation, there may well be some minor differences between the work performed for the respective employers.  However, the requirement is satisfied where, overall, the work is the same or substantially the same – even if the precise duties of the employees, or the manner in which they are performed, have changed.”

[22] Despite the respondent’s submissions relating to the difference in companies, it is clear from the relevant provision and the Explanatory Memorandum that s.311(1)(c) relates to the similarity in the actual work performed by the transferring employee. In light of this consideration, and the evidence and submissions before me, I am satisfied that whilst the work of the companies, the applicant’s title and precise duties may have changed, the overall work that was performed by the applicant for Austcoms and for BTI was substantially the same, namely a combination of both administrative and hands-on work.

[23] I turn now to the final factor and whether there was a “connection” of the type that is described in s.311(1)(d) of the Act between Austcoms and BTI. In considering this factor, I have had particular regard to s.311(3).

[24] The evidence of the applicant was that BTI had continued to make use of some of the tangible assets belonging to Austcoms. These included four registered vehicles, some items of furniture, computers and stationery that were used by BTI in the performance of work. Mr Farrugia provided FWA with a copy of an email, dated 25 August 2009, which he received from Mr Morgan, as evidence that demonstrated the transfer of various assets from Austcoms to BTI. 4 This email also indicated that some assets had already been transferred.

[25] According to Mr Morgan, BTI continued to operate from the same premises as Austcoms until November 2010. They contested the evidence of the applicant and indicated that only one asset, being the telephone system, was directly transferred from Austcoms to BTI.

[26] There appeared to be some initial confusion and it was not made clear to me whether the office furniture and equipment was previously owned by Austcoms, 5 or the applicant.6

[27] However, according to the evidence of the respondent, the applicant sold certain items of office furniture and equipment to a third party and as a result, these items were no longer assets belonging to Austcoms from which BTI were deriving a beneficial use. The respondent tendered evidence of this transaction by way of an email, dated 15 November 2010, sent from the applicant to the third party confirming the details of the transaction. 7 I note that this date appears to fall several months after the commencement of BTI in 2009 and its continued use of equipment owned by Austcoms.

[28] The respondent also conceded that BTI had made use of some computers which belonged to Austcoms. 8

[29] Having regard to these considerations, I make the finding that Austcoms previously owned the registered vehicles, furniture and various equipment that BTI subsequently used in connection with the performance of its work. Whilst the evidence is slightly unclear as to which company took immediate ownership of the relevant assets subsequent to the liquidation of Austcoms, I am satisfied that even if BTI did not take immediate ownership of all of these assets, they did have beneficial use of some of those assets.

[30] Given my findings that the applicant is a transferring employee in respect of the transfer of business from Austcoms to BTI, I am satisfied that the applicant’s prior service with Austcoms can be counted towards his period of employment with BTI. The total period of employment therefore exceeds the requisite minimum employment period.

[31] Accordingly, the applicant is protected from unfair dismissal and the respondent’s motion is dismissed.

SENIOR DEPUTY PRESIDENT

Appearances:

L. Farrugia, for the applicant.

J. Murray, for the respondent.

Hearing details:

Sydney.

2011.

25 February.

 1   Exhibit BTI1, Annexure KM3

 2   Transcript PN77

 3   Transcript PN79

 4   Exhibit F1, Attachment 5

 5   Transcript PN144

 6   Transcript PN154-155

 7   Exhibit BTI2

 8   Transcript PN159

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