Transfer of Business: Previous Employment Counts Towards Minimum Employment Period

Case: Moisidis v Bray on Hampton Pty Ltd t/a Sacred Alley Espresso Bar [2019] FWC 5208
Commission Member: Commissioner Gregory
Decision date: 25 July 2019
Outcome: Jurisdictional objection dismissed; unfair dismissal application to be relisted.

Case Overview

The Fair Work Commission determined that an employee’s more than four years of service with a previous owner of a café counted towards his minimum employment period with the new owner.

The new employer had argued that the employee was not a “transferring employee” under the Fair Work Act 2009 (Cth), and therefore did not have the required 12 months’ service to bring an unfair dismissal application.

The Commission rejected that objection, finding that a transfer of business had occurred. The decision is significant for employees whose employment continues following the sale of a business, even where their formal employment arrangements change.

Background

The employee had worked as a full-time chef at Sacred Alley Espresso Bar for approximately four and a half years.

In October 2018, the café was acquired by a new owner. The previous employer terminated its employees and paid out accrued entitlements. The café then underwent renovations and was partially closed for a period.

The employee commenced working for the new owner within days. Initially, he undertook catering-related food preparation, including some work from home. Once the café was fully operational, he returned to substantially the same chef duties and hours he had performed previously.

The new employer engaged him as a casual chef on a trial basis, with no guaranteed hours. His employment was terminated on 29 October 2018, approximately three weeks after the business changed hands.

The employer contended that the employee had only been employed for three weeks and was therefore ineligible to pursue an unfair dismissal application.

The Jurisdictional Issue

As the employer had fewer than 15 employees, the applicable minimum employment period was 12 months.

The Commission was required to determine whether the employee’s previous service counted towards that period under the transfer-of-employment provisions of the Act.

The key question was whether the employee was a “transferring employee” in relation to a transfer of business under s.311.

For a transfer of business to occur, the relevant requirements included:

The employee’s employment with the old employer had terminated;
The employee became employed by the new employer within three months;
The work performed for the new employer was the same or substantially the same; and
There was a relevant connection between the old and new employers, including through the transfer of business assets.

Was the Work the Same or Substantially the Same?

The new employer argued that the employee’s work had changed. He was initially performing catering duties, the café was undergoing renovations, and he was engaged casually rather than full-time.

The Commission was satisfied that the work requirement had been met.

Although the renovations temporarily changed the employee’s duties, he returned to essentially the same chef work once the café was operational. His hours were also essentially the same as those previously worked.

The Commission considered that the temporary catering work and the change in employment status did not prevent the work from being substantially the same.

Connection Between the Previous and New Employers

The Commission also considered whether there was a connection between the old and new employers under s.311(3).

The new owners had acquired the business assets, including plant, equipment, appliances and intellectual property. The café continued to trade under the same name and in a similar manner, using some of the same assets.

The Commission found that, under an arrangement between the old and new employers, the new employer had acquired or obtained the beneficial use of assets that were connected with the transferring work.

Accordingly, a transfer of business had occurred.

Decision

The Commission found that the employee was a transferring employee and that his service with the previous employer counted towards his minimum employment period.

He had therefore completed the required minimum employment period and was protected from unfair dismissal under the Act.

The employer’s jurisdictional objection was rejected. The substantive unfair dismissal application was to be relisted for determination.

Importantly, this decision dealt only with the jurisdictional objection concerning the employee’s minimum employment period.

Representatives

Applicant: Alan Dircks, Just Relations
Respondent: Ian Macpherson

Commissioner Gregory granted permission for the applicant to be represented under s.596(2)(a), finding that the jurisdictional objection involved a degree of complexity and that representation could assist the matter to be dealt with more efficiently.