Mr Matthew Young v Veolia Environmental Services (Australia) Pty Ltd
[2025] FWC 1898
•4 JULY 2025
| [2025] FWC 1898 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Matthew Young
v
Veolia Environmental Services (Australia) Pty Ltd
(U2024/8244)
| COMMISSIONER THORNTON | ADELAIDE, 4 JULY 2025 |
Application for an unfair dismissal remedy – Jurisdictional objection – Applicant has not met minimum employment period – Whether applicant’s service with former labour hire employer and respondent is continuous – Whether a connection between labour hire employer and respondent in accordance with s.311(5) of the Fair Work Act 2009 – Whether work of applicant was outsourced and/or ceased to be outsourced when employment with the respondent commenced – No connection between labour hire employer and respondent – Minimum employment period not met - Jurisdictional objection upheld – Application dismissed.
Mr Matthew Young (Mr Young or the Applicant) was employed by a labour-hire company, CGH Group Pty Ltd (CGH) from 23 January 2023. He was placed with Veolia Environmental Services (VES or the Respondent) who had a contract to provide services to Santos at its Moomba Plant in the Cooper Basin. Mr Young was employed by CGH as a casual operator and he worked in the Sludge Treatment Plant operated by VES pursuant to its contract with Santos.
From early November 2023 onwards, Mr Young asked VES a number of times, verbally and in writing, to employ him directly. VES ultimately agreed and on 20 May 2024, Mr Young commenced employment with VES as an Operator, Industrial Services, performing the same role as when he was employed by CGH but on a full-time rather than a casual basis.[1]
VES entered into a general services contract with Santos in 2016 for the provision of waste management and industrial services at Santos’ Cooper Basin site. In February 2018, VES and Santos entered into a separate contract for the operation and maintenance of the Sludge Treatment Plant at the same site. Employees were engaged under the general services contract to provide labour to the VES operations at the Cooper Basin site, which included the Sludge Treatment Plant.[2]
In February 2023, VES was advised by Santos that the industrial services and waste management contract was not going to be renewed and was going to be awarded to another contractor.[3] On 28 June 2024, Mr Young was notified by VES that his role was at risk of being made redundant on account of the proposed cessation of the Respondent’s contract to provide services to Santos in the Cooper Basin, and the Respondent made efforts to consult with Mr Young about the proposed redundancy. Mr Young was asked for his feedback in relation to the proposed change to his employment but he did not offer any.[4]
On 4 July 2024, VES wrote to Mr Young informing him that a casual operator role was available in the Cooper Basin, should he wish to accept it. The correspondence set out that if Mr Young did not want to accept the casual role and as no other roles had been identified into which Mr Young could be re-deployed, his employment was to terminate because of redundancy on 5 July 2024. As Mr Young did not express an interest in the casual role referred to, his employment was terminated on 5 July 2024.
On 16 July 2024, Mr Young filed a claim for an unfair dismissal remedy in the Fair Work Commission (the Commission). Mr Young asserts that his redundancy was not a genuine redundancy because the offer of a casual operator role in the Cooper Basin is evidence that the Respondent still requires the Applicant’s job to be performed and his “position still exists”.[5]
The Respondent objects to the application on two jurisdictional grounds. Firstly, that the dismissal was a genuine redundancy and secondly that Mr Young is not a person protected from unfair dismissal because his employment does not meet the minimum employment period of six months under the Fair Work Act 2009 (the Act). It is the Respondent’s position that they employed Mr Young for the period of 20 May to 5 July 2024, being just less than seven weeks.
Mr Young argues that his “service for the Respondent through labour-hire … should be seen as a period of service for the Respondent for the purposes of this unfair dismissal application.”[6] Should Mr Young’s period of service with CGH be continuous then his overall employment period would be 23 January 2023 to 5 July 2024, clearly exceeding the minimum period required under the Act.
The matter proceeded on the basis that the second of the jurisdictional objections would be determined first. This decision concerns whether Mr Young’s period of service with CGH and the Respondent is continuous, such that he has met the minimum employment period under the Act and his unfair dismissal claim can progress.
In order to ascertain whether Mr Young’s employment was continuous it is necessary that I consider the application of the relevant sections of the Act that set out the requirements for employment to be continuous in circumstances where an employee undertakes work for one employer and then commences work for another employer, undertaking the same work. It is necessary that I decide whether, in this case, Mr Young is an employee who transferred between CGH and VES in a manner that preserved the continuity of his employment and results in the period of his employment meeting the minimum employment period.
For the reasons set out below, I find that Mr Young’s employment did not transfer between CGH and VES and his employment with CGH and VES were separate periods of employment. Consequently, Mr Young’s employment for a 7-week period with the Respondent does not meet the minimum employment period.
Relevant Legislation
Minimum employment period
Section 383 of the Act prescribes the minimum period of employment that must be served by an employee to be a person protected from unfair dismissal:
383Meaning 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.
There is no dispute in this matter that VES is not a small business employer and consequently, the relevant minimum employment period that Mr Young must have served to be eligible to bring his unfair dismissal claim is six months. As set out above, Mr Young argues that his employment was for a continuous period of service exceeding six months as his service with CGH transferred to employment with VES.
Section 384(1) of the Act provides a definition of “period of employment”:
384Period 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.
Continuous service
Section 22 of the Act in turn provides a definition of continuous service:
22 Meanings of service and continuous service
General meaning
(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, but does not include any period (an excluded period) that does not count as service because of subsection (2).
…
(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)).
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.
There is no dispute between the parties that Mr Young was employed by VES immediately after he ceased working for CGH. There is also no dispute that CGH and VES are not associated entities. Consequently, the conditions in section 22(7)(a) are not relevant to determining whether a transfer of employment occurred in this case.
As CGH and VES were not associated entities at the time Mr Young was employed by VES (nor are they now), the condition for determining whether a transfer of employment occurred in Mr Young’s circumstances is whether Mr Young was a transferring employee in relation to a transfer of business from the first employer to the second employer (section 22(7)(b)(i)).
Transferring employee and transfer of business
What constitutes a transfer of business is set out in section 311 of the Act as follows:
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.
The operation of section 311 of the Act as it relates to Mr Young’s circumstances is the central issue for determination in this matter.
Considering the facts of this case, for Mr Young’s service to be counted towards his service with VES, the following preconditions must be satisfied:
(a)Mr Young’s employment with CGH must have terminated (s311(1)(a));
(b)Within 3 months of that termination, Mr Young must have been employed by VES (s311(1)(b));
(c)The work performed by Mr Young for VES must have been the same or substantially the same as the work performed for CGH (s311(1)(c));
(d)There must be a connection between CGH and VES as described in sections 311(3) – (5) of the Act (s311(1)(d)); and
(e)If there was a connection between CGH and VES and a transfer of employment did occur, that VES did not notify Mr Young in writing that his period of employment with CGH would not be recognised as service in satisfaction of section 384(2)(b)(iii) of the Act, such that there could be no continuity of service.
The conditions in section 311(1)
Section 311(1)(a)
The matter of whether Mr Young’s employment with CGH had been terminated at the time he was employed by VES was a matter dealt with by further evidence and submissions filed after the conclusion of the hearing. In its submissions, the Respondent accepted that the requirements of section 311(1)(a) were satisfied.[7] However, during the oral evidence of the Applicant he disclosed that he had not directly communicated with CGH about the termination of his employment. Mr Young told the Commission, with respect to any termination of his employment: “I had no contact with [CGH]. I was led to believe that [VES] was going to sort that out.”[8]
Mr Young also set out in his oral evidence that CGH had made contact with him after his redundancy from VES to ask about his interest in undertaking further work. Despite confirming his interest in accepting work with CGH, at the time of the hearing Mr Young had not received any further offers of work from CGH.
Following the oral evidence given by the Applicant, the Respondent then submitted in closing submissions that the Commission could not be satisfied that the Applicant’s employment with CGH had been terminated and consequently that section 311(1)(a) had in fact been met.
Given Mr Young’s evidence that the end of his employment with CGH and the commencement of his employment with VES was essentially managed between CGH and VES without his involvement, I directed the Respondent to provide any further evidence within its knowledge of the circumstances surrounding the end of Mr Young’s employment with VES. I also allowed an opportunity for the Applicant to respond to any additional evidence provided.
The Respondent submitted a witness statement from Mr Colin Wellings, Contracts Delivery Manager for VES. Mr Wellings said in his statement that after Mr Young accepted the offer of direct employment with VES that no communication occurred between the Respondent and CGH about Mr Young’s direct employment with them, or by implication, the cessation of his employment with CGH. Mr Wellings says that in a telephone conversation with Ms Samantha Smith, Lead Account Manager for CGH on 31 July 2024, she confirmed that Mr Young was an “active employee” with CGH and was “still on [their] books”.[9]
The Respondent contends that there is not a sufficient basis for the Commission to conclude that the Applicant’s employment with CGH was “definitively terminated”[10] and that there are insufficient grounds to find that the condition in section 311(1)(a) has been met.
The Applicant’s representative did not seek to cross examine Mr Wellings and did not submit any further evidence with respect to any termination of his employment with CGH. However, the Applicant made further submissions about what he says was clearly a termination of employment that can be summarised as follows:
(a)Mr Young was a casual employee with CGH and consistent with section 15A of the Act and relevant case law, Mr Young had no firm advance commitment to ongoing work from CGH with each shift he performed being a separate contract of employment, such that a failure to offer shifts to Mr Young constituted a termination of his employment; and
(b)Mr Young had demonstrated that he was “no longer willing or able to accept casual shifts for CGH” and by doing so that he had “effectively terminated the prior casual employment relationship.”[11]
I am persuaded by the submission made by the Applicant that Mr Young’s acceptance of a fulltime position with the Respondent was not compatible with ongoing casual employment with CGH and his employment with CGH terminated at the time he commenced his employment with VES. This is consistent with the approach adopted by Deputy President Gooley in the matter of Burdziejko v ERGT Australia Pty Ltd[12] when considering the operation of section 311(1)(a). There is no evidence before me that any of the parties treated Mr Young’s employment as anything other than terminated with CGH at the time he commenced work with VES. The Applicant submitted into evidence his last payslip from CGH for the pay period ending on 14 April 2024. I accept that CGH did not offer Mr Young shifts after he commenced employment with VES until his employment with VES had concluded.
The fact that CGH has made a more recent offer of employment to Mr Young does not lead to a conclusion that his earlier employment as a casual employee did not end at the time he accepted fulltime employment with VES.
The condition in section 311(1)(a) is met.
Section 311(1)(b)
There is no dispute in this matter that Mr Young ceased working in the Sludge Treatment Plant as an employee of CGH just prior to his commencement as an employee for VES in the Sludge Treatment Plant for VES on 20 May 2024.
The condition in section 311(1)(b) is met.
Section 311(1)(c)
The Applicant submits that he “continued performing the same work after transitioning from the CGH Group to direct employment” with the Respondent.[13] The Applicant’s evidence was that he “performed the same role as an Operator at the same plant on the same roster when [his] employment was transferred from CGH Group” to the Respondent, with the only difference being the employer named on his pay slips.[14] This evidence was not disputed by the Respondent.
The Respondent initially argued in their written submissions that the condition in section 311(1)(c) was not met because “the Applicant was employed on a casual basis with CGH and on a permanent basis with VES.”[15] However, the Respondent advised the Commission in their opening submission at the hearing that they no longer pressed this argument.[16]
I am satisfied that the condition in section 311(1)(c) is met. Mr Young performed the same work in the same role during his employment with CGH that he continued to perform when employed by VES. In my view, the reference to transferring work in section 311(1)(c) is to the actual work performed and not the type of employment in which the employee was engaged. This view is supported by the commentary in the Explanatory Memorandum to the Fair Work Bill 2008 when referencing section 311(1)(c), where it refers to the precise duties performed by the transferring employee: “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.”[17]
Where the provisions focusing on the work of a particular employee are met in section 311(1)(a) – (c), there is a further requirement in section 311(1)(d) that there be a connection between the old employer, CGH, and the new employer, VES, as described in subsections 311(3) – (6).
Section 311(1)(d) - The requirement for a connection between the old employer and new employer in sections 311(3) – (6)
Sections 311(3) and (6) have no relevance to this matter. There is no evidence that there was a transfer of assets between CGH and VES or, as set out above, that VES is an associated entity of CGH.
Section 311(4) of the Act establishes a connection between an ‘old employer’ and a ‘new employer’ in circumstances where transferring work is performed by at least one transferring employee as an employee of the new employer, because the old employer has outsourced the transferring work to the new employer. There is no suggestion by either party that CGH outsourced work to VES.
The Applicant relies on section 311(5) as the basis for his claim that a transfer of business has occurred. The Applicant asserts that the work he performed for CGH was outsourced by VES to CGH at the time he was employed at CGH. Critical to the Applicant’s case is his assertion that a transfer of business occurred, relating specifically to the work he performed, at the time his work as an operator in the Sludge Treatment Plant transferred back (or was insourced) to VES with Mr Young’s engagement by VES in direct employment.
The Respondent concurs with the Applicant that this matter turns on the application of section 311(5) of the Act to the facts in this case.[18] Section 311(5) of the Act in essence says that a connection will exist between an old and new employer if the transferring work is outsourced and is later insourced, or as expressed in the Act, if the new employer ‘ceases to outsource’ work to the old employer. Section 311(5) provides:
“New employer ceases to outsource 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.”
In these circumstances the transferring work is Mr Young’s work in the Sludge Treatment Plant and Mr Young is the transferring employee. The old employer is CGH and the new employer is VES.
The application of section 311(5) of the Act
The central contest in this matter can be distilled to:
(a) Whether Mr Young was initially engaged by VES as supplementary labour through CGH as a labour hire employer then subsequently engaged in a direct but separate employment relationship with the Respondent; or
(b) Whether VES outsourced the work performed by Mr Young at the time he was engaged to perform it through CGH and then later insourced the work when it employed him directly.
The Applicant’s submissions and evidence
The Applicant’s submissions on the matter can be summarised as follows:
(a)VES outsourced the work performed by Mr Young when it engaged CGH to provide labour to do that particular work.
(b)VES ceased to outsource the work performed by Mr Young when it was insourced by VES at the time it engaged Mr Young in direct employment.
(c)The work performed by Mr Young was “to fulfil a critical and ongoing function”[19] in the Sludge Treatment Plant. The work performed by Mr Young was a specific role that was not supplementary to cover work peaks, employee leave or vacancies created by resignations whilst recruitment took place. His role was not temporary or supplementary but rather “a core function necessary to meet [VES’] contractual obligations” that was “integral to operations”.[20] Therefore, the work performed by Mr Young could not be found to be supplementary labour.
(d)The work performed by Mr Young for VES can be distinguished from the provision of supplementary labour because it was not meeting a temporary need in the Respondent’s operations and did not “exist only to supplement the existing workforce” but was rather the performance of an actual, consistent, required position.[21]
(e)The offer of direct employment by VES to Mr Young was ceasing to outsource “this specific function” of a role that had been “fully outsourced to another entity.”[22]
(f)The Commission should not accept the submission of the Respondent that the work performed by Mr Young could not have been insourced because the Respondent continued a relationship with CGH for the provision of labour after Mr Young was directly engaged. The continuation of the relationship to provide labour hire employees between VES and CGH does not alter the character of the insourcing of Mr Young’s work at the time of his employment with VES.
These submissions were supported by the evidence given by Mr Young about the sameness of the role he performed for CGH and VES.
The Respondent’s submissions and evidence
The evidence of Ms Davis, General Manager of VES in South Australia, was that VES has a contractual arrangement with CGH under which CGH provides labour to VES. Extracts of the contract were submitted into evidence. The contract provides, among other things, that CGH will maintain a sufficient number of suitably qualified and skilled employees to facilitate the performance of the services required and that labour hire employees will at all times remain employees of CGH with CGH meeting all employment related costs.
Ms Davis was a former employee of CGH and she told the Commission that “CGH is a labour hire company which provides additional workers to the relevant … company as and when requested”.[23] Her evidence was that VES did not exclusively engage labour hire employees from CGH and also worked with at least one other labour hire company.
Ms Davis accepted that CGH labour hire employees were needed by VES to cover temporary absences and upsurges in work and that VES engaged six labour hire employees from CGH at the Cooper Basin from January 2024. However, she says that at the time Mr Young’s employment with CGH commenced, VES had approximately fifteen labour hire employees from CGH that were engaged because the “work VES was engaged to do was project-based a lot of the time so guaranteed tenure into the future could not be given.”[24]
Ms Davis gave evidence that when Mr Young was employed by CGH that he was assigned to work in the Sludge Treatment Plant alongside VES employees as a “back-up, crossing over the two back-to-back operators’ rosters”[25] to ensure operators were not alone for days when on shift in the Sludge Treatment Plant.
Ms Davis told the Commission that the decision to directly employ Mr Young was prompted by multiple requests by telephone, email and in person from Mr Young to employ him directly.
The Respondent’s submissions on the application of section 311(5) can be summarised as follows:
(a)There is no connection between CGH and VES pursuant to the terms of sections 311(3) – (6) of the Act so no transfer of business has occurred.
(b)VES had its own direct employees providing services under the contract with Santos, which comprised the majority of its workforce.
(c)VES only wound down and ceased to use CGH services in the Cooper Basin because it lost the contract with Santos and not because any decision was made to “take back the work previously given to labour hire workers, but because the client contract had been lost and there was no work left to be performed by anyone.”[26] VES continues to engage labour hire employees from CGH around Australia at other sites. The decision to reduce the number of labour hire employees in the Cooper Basin was solely due to the loss of the contract and “had nothing to do with a decision to insource previously outsourced work”.[27]
(d)The submission of the Applicant that the work performed by Mr Young was insourced is ill-conceived because the work was never outsourced. As there was no outsourcing of the work performed by Mr Young, the second limb, considering whether the work was insourced cannot be reached. In its opening submissions the Respondent said “the crux of our argument is that this is a scenario where no outsourcing has occurred, meaning there can’t be any ceasing to insource.”[28]
(e)It would be an absurd result for the Commission to find that work could be outsourced and insourced on a daily or weekly basis when a decision was made to engage or not engage a single labour hire employee.
(f)For the Commission to find that outsourcing or insourcing occurred, there must be evidence of some arrangement whereby VES has outsourced work to CGH and then taken it back. There is no evidence of that in this matter because it did not occur.
(g)The Applicant was one of a number of employees of CGH that were placed with VES to enable VES to supplement its own workforce when there was a need. As there was no outsourcing of the work performed by Mr Young, there was no insourcing of the same work and therefore there was no transfer of business necessary to establish continuous employment for Mr Young.
Relevant case law
Section 311(5) of the Act and the existence of outsourcing of transferring work has been considered a number of times by single members of the Commission. There is no identifiable Full Bench authority about the operation of section 311(5). Each matter has turned on its own facts.
The concepts of ‘outsourcing’ and ‘insourcing’ are not defined in the Act. The Macquarie dictionary definition of outsource “to contract (work) outside the company rather than employ more in-house staff” has been adopted as the ordinary meaning of the term in previous decisions of the Commission.[29] In the matter of Richards v Barro Group[30] (Richards), Commissioner McKinnon noted: “[t]he definition is broad. On one view, it would encompass any employer decision to use contractors to perform work. However, it also points to the need for a decision of the employer to engage contractors instead of employing more employees to undertake particular work.”[31]
The Applicant’s case relied on authority from the decision of Commissioner Cambridge in the matter of Taulapapa v Toll Personnel Pty Ltd[32] (Taulapapa). In the matter of Taulapapa, the Applicant was engaged as a labour hire employee by a labour hire employer and placed in a warehouse. A new entity took over operations of the warehouse and did not directly employ any employees but rather continued to engage the labour hire employees, including the Applicant, engaged by the labour hire employer. After approximately six months, the warehouse operator commenced engagement of labour hire employees from a related entity and then later, direct employment of their own employees. The warehouse operator initially continued to maintain the engagement of labour hire employees, including the Applicant from the labour hire employer.
Soon thereafter, the warehouse operator increased engagement of labour hire employees from their related entity and reduced the number of labour hire employees from the Applicant’s labour hire employer. As a result, the related entity made offers of employment to employees of the Applicant’s labour hire employer. The Applicant was subsequently engaged by the related entity, continued his work at the warehouse and was not informed that his previous period of employment would not be recognised by the related entity. When the Applicant’s employment was subsequently terminated, the related entity argued that he had not met the minimum employment period.
The Commissioner held that it was consistent with the commentary in the Explanatory Memorandum to the Fair Work Bill 2008 to give the transfer of business provisions in the Act a broad interpretation and “focus upon the work done by the transferring employee rather than any broader contemplation of outsourcing any particular business activity or functions.”[33] The Commissioner went on to say that the fact that a new employer may not have insourced all of the transferring work or retained a mixture of direct hire and labour hire personnel “should not be interpreted to mean that the employer had not ceased to outsource the work. Rather the test to be applied is whether the work of the transferring employee had ceased to be outsourced (aka in-sourced).”[34]
The Commissioner held that when the warehouse operator commenced management of the warehouse it initially outsourced the transferring work to the Applicant’s labour hire employer (the old employer). Then, when the Applicant commenced employment with the related entity of the warehouse operator (the new employer), the warehouse operator ceased to outsource the work to the Applicant’s labour hire employer. Consequently, there was a sufficient connection between the Applicant’s labour hire employer and the related entity such that the Applicant’s employment transferred and his period of employment met the legislative minimum.
As addressed further below, there is no evidence in the current matter of a decision to outsource transferring work to a new employer or later bring it back into the VES operations at the Sludge Treatment Plant. The facts in Mr Young’s situation suggest that his engagement as an operator at the Sludge Treatment Plant on a labour hire basis was motivated by increasing the number of employees for safety reasons and was later converted to direct employment at Mr Young’s request, rather than on account of any decision that the work should be performed ‘in-house’.
The decision of Deputy President Asbury, as she then was, in the matter of Abbott v Acciona Infrastructure Australia Pty Ltd[35] (Abbott) considered in detail the circumstances in which outsourcing or insourcing of work might engage section 311(5) and establish the requisite connection between an old employer and a new employer so as to lead to a transfer of business, in light of previous decisions of the Commission.[36] Deputy President Asbury found that the term outsourcing should be given its ordinary meaning but held:
“[44] I do not accept that the term “outsource” applies to any circumstance where an employer engages labour from an external supplier to undertake any work within the employer’s business. The provisions focusing on the work of a particular employee are found in s. 311(1)(a) – (c) . Where those are met, there is an additional requirement in s. 311(d) that there be a connection between the old employer and the new employer as described in any of subsections 311(3) – (6). In establishing such a connection for the purposes of those subsections, the term “outsource” must have some work to do. That term in my view, directs attention to the outsourcing arrangement which is the arrangement between the entity outsourcing the work and the entity which will perform the work. It is only where such an arrangement is in place that a connection between two employers as provided in s. 311(4) and (5) will be established. In short, something more than an employee ceasing to perform particular work for one employer and commencing to perform the same or substantially the same work at the same location for another employer is required.
If this was not the case then there would be no requirement to use the term “outsource” and the legislation would simply state that where an employee performs work in a particular workplace for one employer and is offered substantially the same work in the same workplace by another employer, the service of the employee will be deemed continuous. Clearly the additional requirement that there be a connection must operate on the basis of something additional. Each of the subsections 311(3) – (6) provide for additional requirements to establish a connection for the purposes of s. 311(d).
An employer contracting with a labour hire company for the labour hire company to provide an employee of the labour hire company to supplement its workforce or to replace an absent employee will not automatically be found to have outsourced the relevant work. Rather, the employer may simply be engaging additional labour in a flexible manner, to ensure that it can continue to undertake particular work. Conversely, it does not follow that an employer who has engaged an employee of a labour hire company to supplement its own workforce, or to replace an absent employee and then after a period of time offers that employee employment within its business, will be found to have ceased to outsource the work the relevant employee was previously undertaking.
In my view there is a distinction between an employer engaging supplementary labour through a labour hire company and outsourcing work. There will be occasions where the distinction is difficult to establish and the side of the line that a particular case falls on will be determined by the facts and circumstances of that case including:
· The nature of the arrangement between the provider of the labour and the company engaging the labour;
· Whether that arrangement continues after the putative outsourcing has taken place;
· Whether all or some of the labour hire employees in the particular workplace are offered employment at the time of the putative cessation of the outsourcing; and
· Whether the company engaging the labour has some employees “in house” who are carrying out the work and will continue to do so.”[37]
(emphasis added)
In Abbott, the Deputy President (as she then was) found that the approach she adopted to determining whether outsourcing has occurred, as set out above, was not inconsistent with the plain words in the Act or the example referred to in the Explanatory Memorandum.
A number of decisions about the application of section 311(5) have considered guidance provided by the Explanatory Memorandum to the Fair Work Bill 2008 in understanding the meaning of outsourcing and insourcing. The Explanatory Memorandum includes an example to illustrate the operation of outsourcing and insourcing of transferring work that involves a human resource consultancy firm employing a number of security guards at its reception desk that it decides it no longer wishes to employ directly. It then enters into a contract with a security company to provide its security services and that company employs the security guards and places them at the human resource consultancy firm. After two years, the firm decides to again employ the guards directly, it terminates the contract with the security company and employs the guards to do the same work they were doing before.
The Applicant submits that the reasoning of Commissioner Cambridge in Taulapapa should also be preferred as the authority for the meaning of outsourcing because of the detail in which the Commissioner considered the Explanatory Memorandum. After considering the Explanatory Memorandum in detail, the Commissioner concluded that the application of subsection 311(5) of the Act “should focus upon the work done by the transferring employee rather than any broader contemplation of outsourcing any particular business activity or functions … the fact that the new employer may not have in-sourced all of the transferring work and retained a mixture of direct hire and labour hire personnel, should not be interpreted to mean that the employer had not ceased to outsource the work. Rather, the test to be applied is whether the work of the transferring employee had ceased to be outsourced.”[38]
The Respondent submits that the reasoning in Abbott is a correct statement of the law.[39] Further, they argue that the matter of Howarth v ResourceCo Pty Ltd[40] (Howarth) highlights the important distinction that must be made between engaging supplementary labour through a labour hire company and outsourcing work when determining if the requisite connection exists to find a transfer of business has occurred.
In Howarth, Deputy President Clancy was persuaded to find that a labour hire arrangement existed, rather than outsourcing having occurred, because the Respondent employer employed employees directly at the same time as engaging the labour hire employees, and the commercial arrangement between the labour hire employer and the Respondent pre and post-dated the employment of the Applicant.
Consideration
In this matter, the arrangement between CGH and VES appears to be a conventional labour hire arrangement. VES advises CGH when additional labour is needed in their operation and CGH is contractually bound to have available, suitably qualified and skilled workers to undertake the work required. CGH remain the employer of the workers when they are placed with VES. VES does not exclusively use the services of CGH as a labour hire provider. Relevantly, the arrangement between CGH and VES for the provision of labour commenced before Mr Young was employed by CGH and continues across various sites around the country.[41] These are characteristics accepted as indicative of a labour hire arrangement by Deputy President Clancy in the matter of Howarth.
Further, when employed by CGH, Mr Young worked alongside fulltime, ongoing employees of VES. I accept that his role was added to the operations of the Sludge Treatment Plant to ensure operators were not working alone. The decision to offer Mr Young direct employment with VES was motivated by his interest in gaining fulltime work, not by any business decision to perform the work done by Mr Young in-house.
In that regard, I adopt the sound reasoning of Deputy President Asbury in Abbott. In my view more is required to find that outsourcing occurred than an employee ceasing to perform work for one employer and starting the same or similar work with a new employer. It must also be more than merely an employer engaging with a labour hire provider for the provision of labour. Whilst Commissioner McKinnon notes in Richards that the definition of outsourcing may be broad enough to include any decision of an employer to engage flexible labour, she also notes that the definition points to the need for a decision to engage contractors to perform what she describes as a category of work. This is consistent with the view taken by the Deputy President in Abbott: a decision to engage workers under a contracting arrangement to perform a certain category or type of work would be more than the direct engagement of former labour hire employees who cease work with the old labour hire employer to commence the same or similar work with the new employer.
The Applicant submitted that Taulapapa is the preferred authority that ought to be accepted because of the “relevance of legal principles, factual similarity and judicial interpretation.”[42] I disagree that the reasoning in Taulapapa should be preferred on the basis of factual similarity or otherwise. The facts can be distinguished. In Taulapapa, the warehouse operator did not initially directly employ employees to perform the transferring work. The work was performed entirely by labour hire employees. Then a decision was made to engage employees from a related entity, again on a labour hire basis, as well as to commence direct employment while reducing labour from the Applicant’s labour hire employer. In Mr Young’s circumstances, VES had its own direct employees performing work at the Sludge Treatment Plant at the time who comprised the majority of its workforce. Mr Young’s role supplemented the work already being undertaken by direct employees.
The Applicant argued that the focus of section 311(5) is on the transferring work done by the particular employee and emphasised the reference to a singular employee in the comments about section 311(5) in the Explanatory Memorandum: “The intention of this subclause is that a transfer of business occurs where a new employer decides to in-source the work previously done by the transferring employee of the old employer.”[43]
I again adopt the reasoning in Abbott where the Deputy President notes that sections 311(1)(a) – (c) of the Act focus on the work of a particular employee, but the provisions of section 311(1)(d) are focused on a connection between the old and new employers. In accordance with the view I have expressed that more than the engagement of labour hire employees to perform work or a decision to employ labour hire employees directly is required to establish outsourcing or insourcing, it seems to me that some kind of a decision is required by the relevant employer to contract out work, or bring back into the business the work that was being done by the transferring employees. The Act makes clear that a connection between two entities can be established where transferring work performed by one or more transferring employees is outsourced or insourced. Consequently, the emphasis placed by the Applicant on the work of Mr Young as a singular transferring employee does not assist in deciding the matters in issue.
In this case, the decision to engage the services of Mr Young through CGH was made to ensure that another employee was working alongside other operators in the Sludge Treatment Plant for safety reasons. The evidence does not reveal that a decision was made to contract out the work done by the Sludge Treatment Plant operators as an alternative to employing employees directly. I accept the evidence of Ms Davis that labour hire employees were engaged for the usual reasons related to fluctuating labour such as absences on leave, but also because much of the work was project based and not able to be offered or guaranteed for longer periods.[44] I do not accept that the work undertaken by Mr Young was initially outsourced to CGH such that the outsourcing was later ceased.
The Applicant relies on the employment of Mr Young in what he says is a specific, ongoing role, necessary to the operations of the Sludge Treatment Plant to distinguish this matter from Abbott or Howarth. I do not agree that the provision of labour hire employees placed in specific and required roles inevitably leads to a conclusion that the work has been outsourced. Of course it is open to an employer to engage employees directly to fill specific roles, but it remains open to them to engage labour hire employees to supplement its workforce for other reasons. The reasons could include, for example, gaining information about the need and viability of a role, delays in direct recruitment or concerns about the availability of the role on an ongoing basis. To engage a labour hire employee or employees in specific roles does not mean as a matter of course that the role has been outsourced.
In this matter, the evidence shows engagement of a labour hire employee engaged to supplement the existing VES workforce, not a decision to have another entity undertake the transferring work performed by one or more transferring employees.
In turn, I do not accept that the work done by Mr Young has been insourced by VES. The decision to engage Mr Young as a direct employee was motivated by his requests for direct employment. There is no evidence before me to suggest that the decision to cease engaging Mr Young via CGH was due to business or other operational reasons, or in effect that more was done other than to engage his labour directly. The role performed by Mr Young was a role added to the usual roster of operators to ensure that operators did not work alone at the Sludge Treatment Plant. The Respondent engaged CGH to provide a suitably qualified employee to perform the specific role. When Mr Young was offered direct employment, it was not a decision to cease contracting CGH to provide an employee to perform the work undertaken by Mr Young’s role in order to perform it in-house for reasons other than Mr Young wanted to cease casual employment with the labour hire company and work fulltime for the Respondent.
In addition, I accept the Respondent’s submission that in this case, as there was no outsourcing of the work performed by Mr Young, the work cannot be insourced.
Section 384(2)(b)(iii)
When considering the period of employment under section 384 of the Act, section 384(2)(b) stipulates:
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 as a regular casual employee; 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.
It is not in dispute that Mr Young was engaged as a casual employee when employed by CGH, he was a regular casual employee and he had a reasonable expectation of continuing employment on a regular and systematic basis. The evidence was that Mr Young was already on site, performing work at the Sludge Treatment Plant before he was formally engaged by CHG, performing the same work on the same shifts as other employees who were directly employed by VES.
This period of service as a casual employee can be counted towards a period of service if the employee was a regular casual employee with a reasonable expectation of continuing employment on a regular and systematic basis, in addition to being a transferring employee in relation to a transfer of business between two non-associated entities. However, if the new employer informed the employee in writing that their period of service with the old employer would not be recognised, then the previous period of service will not be counted towards the period of employment.
Mr Young argued that he met all of the requirements of section 384(2). Mr Young submitted that he had not been informed in writing by VES that his prior service with CGH would not be recognised in accordance with section 384(2)(b)(iii) of the Act and consequently section 384(2)(b)(iii) was not a barrier to asserting his period of employment was the combined period he was employed by both CGH and then VES.
The evidence of Ms Davis for the Respondent was that: “No reference was made to Mr Young’s prior service with CGH because it was not relevant to his employment with VES. As with any new employee, Mr Young’s employment was subject to a six-month probationary period.”[45] In addition, the Respondent noted in its Form F3 Response to the application that the Applicant was provided with a new contract of employment with a commencement date for employment and a clause which referred to the contract replacing all previous arrangements and contracts between the parties. Whilst not put forward as the Respondent’s position in submissions, the evidence of Ms Davis and the statements in the Form F3 inferred that the Respondent considered the contractual terms sufficient to meet the requirements of section 384(2)(b)(iii).
As I have found that there was no transfer of business, this factor is of no consequence to the outcome in this matter. However, for completeness, I note that previous decisions of the Commission have considered this issue and determined that the inclusion of a period of probation in a letter of offer or contract of employment does not satisfy the requirements of section 384(2)(b)(iii). Deputy President Gooley found in the matter of Gregory v Shaver Shop Pty Ltd[46]: “Where there is a transfer of business the employer is obliged to make it clear to the transferring employee whether service with the old employer will be recognised”[47] and “it is necessary for the letter of offer to contain an unambiguous statement. That statement must specifically address the requirements of s.384(2)(b)(iii) namely that service with the old employer will not be recognised.”[48]
Deputy President Asbury (as she then was) also considered the content of the written notification required under section 384(2)(b))(iii) in the decision of Abbott as follows:
“I do not accept the submission that the terms of the written contract of employment between Acciona and Mr Abbott placed Mr Abbott on notice that his service with Dowells would not be recognised. The mere act of establishing a probationary period in a contract of employment does not constitute informing Mr Abbott in writing that his service with Dowells would not be recognised in the manner contemplated in s.384(b)(iii). That provision clearly requires that the employee be informed of this specific matter, and not that the employee is put on notice that an inference should be drawn from an apparently unrelated contractual term.”[49]
Conclusion
The necessary elements of section 311(a) – (c) of the Act are met. However, I find that there was no connection between CGH and VES as required by sections 311(1)(d) and 311(5) of the Act. Consequently, there was no transfer of business between CGH and VES.
Accordingly, there was no transfer of Mr Young’s employment between CGH and VES as required by section 22(7)(b) for his employment with CGH to be counted as a period of service with VES.
Mr Young was employed by VES between 20 May 2024 and 5 July 2024. His period of employment of just less than seven weeks does not meet the minimum employment period of six months required under section 383 of the Act for Mr Young to be a person protected from unfair dismissal under section 382 of the Act.
Therefore, as I find that the minimum employment period has not been met, the Respondent’s jurisdictional objection is upheld. Mr Young’s application for an unfair dismissal remedy is dismissed. An order giving effect to this decision will be published concurrently.[50]
COMMISSIONER
Appearances:
S Russell of the Australian Workers’ Union, on behalf of the Applicant, M Young.
A Speak and J Fowler of Mills Oakley with permission, with J Micallef on behalf of Veolia Environmental Services (Australia) Pty Ltd.
Hearing details:
Adelaide (Video by MS Teams)
2024
6 September.
Final written submissions:
Respondent: 10 December 2024
Applicant: 18 December 2024
[1] See Statement of agreed facts dated 14 August 2024.
[2] Statement of Ms Amy Davis at paragraphs 12 – 16.
[3] Ibid at paragraph 30.
[4] Letter of termination dated 4 July 2024.
[5] Form F2 at 3.2 (17).
[6] Ibid at 3.2 (7).
[7] Submissions of the Respondent at paragraph 23.
[8] Audio recording of the hearing at 12:57.
[9] Statement of Colin Wellings at paragraphs 10 – 13.
[10] Respondent’s further submissions at paragraph 5.
[11] Applicant’s further submissions at paragraph 9.
[12] [2015] FWC 2308 at [19].
[13] Submissions of the Applicant at paragraph 10.
[14] Statement of Matthew Young at paragraphs 13 and 14.
[15] Submissions of the Respondent at paragraph 24.
[16] Audio recording of the hearing at 24:24.
[17] Explanatory Memorandum to Fair Work Bill 2008 (Cth) at paragraph 1217.
[18] Audio recording of the hearing at 24:12.
[19] Applicant’s submissions in reply at paragraph 10.
[20] Ibid.
[21] Ibid at paragraph 9.
[22] Ibid at paragraph 9-10.
[23] Statement of Amy Davis at paragraph 9.
[24] Ibid at paragraph 24.
[25] Ibid at paragraph 25.
[26] Submissions of the Respondent at paragraph 36.
[27] Ibid at paragraph 40.
[28] Audio recording of the hearing at 28:11
[29] Burdziejko v ERGT Australia Pty Ltd[2015] FWC 2308 at [26], Cokuzovski v Yarra City Council T/A Yarra City Council [2018] FWC 155 at [84], Taulapapa v Toll Personnel Pty Ltd [2018] FWC 6242 at [37], Richards v Barro Group Pty Ltd[2020] FWC 2687 at [10], Howarth v ResourceCo Pty Ltd[2023] FWC 1771 at [36].
[30] [2020] FWC 2687.
[31] Ibid at [10].
[32] FWC [2018] 6242 (‘Taulapapa’).
[33] Ibid at [39].
[34] Ibid.
[35] [2018] FWC 5609 (‘Abbott’).
[36] See for example Arol v Brimbank City Council[2023] FWC 930 at [26].
[37] Abbott at [44]-[47].
[38] Taulapapa at [39].
[39] Submissions of the Respondent at paragraph 28.
[40] [2023] FWC 1771.
[41] Statement of Amy Davis at paragraph 37.
[42] Applicant’s submissions in reply at paragraph 14.
[43] Explanatory Memorandum to the Fair Work Bill 2008 (Cth) at paragraph 1226.
[44] Statement of Amy Davis at paragraphs 19 and 24.
[45] Ibid at paragraph 29.
[46] [2016] FWC 1323.
[47] Ibid at [18].
[48] Ibid at [17].
[49] Abbott at [53].
[50] PR788850.
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