[2018] FWC 2282
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009

Section 394 - Application for unfair dismissal remedy

Mr Kevin Kruger
v
Kingfisher Ferry Services
(U2018/1464)

DEPUTY PRESIDENT ANDERSON

ADELAIDE, 23 APRIL 2018

Application for an unfair dismissal remedy – minimum employment period – whether service with former employer counted – section 22 Fair Work Act 2009 - whether transfer of business - section 311 Fair Work Act 2009 – non-associated entities – no transfer of assets - no transfer of business - prior service not counted – application dismissed

[1] Kevin Kruger has lodged an application with the Fair Work Commission (the Commission) under section 394 of the Fair Work Act 2009 (the FW Act) in relation to the termination of his employment with Kingfisher Ferry Services Pty Ltd (Kingfisher or ‘the employer’).

[2] Mr Kruger was dismissed on 1 February 2018 on the ground that the employer decided not to employ him beyond a probationary period. He was paid until 7 February 2018. He worked for Kingfisher for three months, from 1 November 2017. He claims his dismissal was harsh, unjust or unreasonable. He seeks compensation.

[3] Kingfisher claim that they are a small business employing fourteen persons. They raise a jurisdictional issue. The employer says that Mr Kruger is not a person protected from unfair dismissal because he had not completed the minimum employment period required by sections 382(a) and 383 of the FW Act.

[4] Mr Kruger says that his service with prior employers since 2006 should be taken into account. He says that at the very least his five years of service with the immediate prior employer (Swift Ferry Service Pty Ltd or ‘Swift’) should be taken into account. If it is, he says that he has served the required minimum employment period (whether it be 12 months in a small business or 6 months in a business other than a small business).

[5] I issued directions on the matter on 20 March 2018. 1 Written materials were lodged by Mr Kruger and by Kingfisher in accordance with these directions.

[6] I conducted a hearing by telephone on 19 April 2018. I did so in order to adduce sworn evidence and take oral submissions. A sound file recording of the hearing was made.

[7] Mr Kruger gave evidence on his witness statement, as did the Mr Mark Davis the sole director of Kingfisher. I reserved my decision.

[8] This decision is reached on the basis of all of the documentary and oral evidence and submissions before me.

The Legal Principles

[9] Section 382(a) of the FW Act provides that a person is protected from unfair dismissal if they have completed a period of employment of at least the minimum employment period.

[10] The minimum employment period is a jurisdictional prerequisite and the Commission does not have any discretion to waive or alter that requirement. 2

[11] Section 383 of the FW Act sets out the legally required minimum employment period for applications of this type:

[12] Kingfisher asserts that it is a small business employing 14 persons at the time it gave notice of dismissal. Mr Kruger did not contest this assertion. For the purposes of this decision, I accept that evidence as an agreed fact. The minimum employment period applicable to Mr Kruger was 12 months. I note that at least three months of Mr Kruger’s five years of service with the preceding employer (Swift) would need to be counted to meet a 6 month minimum employment period requirement if the employer had not in fact employed fewer than 15 employees. Thus the issue of whether prior service with Swift is to be counted is determinative whether the minimum employment period is 12 or 6 months.

[13] Section 384 of the FW Act defines what constitutes an employee’s period of employment for these purposes. It provides:

“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 on a regular and systematic basis; 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.”

[14] Section 22 of the FW Act defines “continuous service” as follows:

“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).”

[15] None of the excluded periods in section 22(2) apply to this matter.

[16] Section 22(5) specifies when service with one employer counts as service with another employer. It relevantly provides that:

“When service with one employer counts as service with another employer

(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.”

[17] Section 22(7)(b) provides that there is a transfer of employment involving non-associated entities if the employee is a transferring employee in relation to a transfer of business from the first employer to the second employer. It relevantly states:

“Meaning of transfer of employment etc.

[18] Also relevant to this matter are the provisions of section 311 of the FW Act which govern when a transfer of business has occurred. It provides:

311  When does a transfer of business occur

The Facts

[19] The facts in this matter are largely uncontested and can be simply stated.

[20] Mr Kruger was an operator of a passenger ferry carrying vehicles over the River Murray at Lyrup in South Australia.

[21] He commenced this work in 2006 and continuously performed it for 12 years until 1 February 2018.

[22] The ferry is owned by the South Australian government through the State Department of Planning, Transport and Infrastructure (the State government).

[23] The State government contracts the operation of the ferry by competitive tender to private contractors (the contracted business). The contracted business employs ferry operators. The State government, neither directly nor indirectly via its tender, plays any role in regulating the terms of employment of persons employed by the contracted business.

[24] The State government owns the assets, plant and equipment used to operate the ferry. A contracted business provides a small amount of equipment used by it and its employees such as a tool kit, cleaning materials and a fridge.

[25] Mr Kruger was first employed as a ferry operator at Lyrup in 2006. Until his dismissal on 1 February 2018 he was continuously employed to do this work by three contracted businesses: by a Mr Watts between 2006 and 2012; by Swift (operated by Mr David Brown) between 2012 and 31 October 2017; and by Kingfisher (operated by Mr Mark Davis) between 1 November 2017 and 1 February 2018.

[26] Mr Kruger was employed as a casual employee but working in the vicinity of 40 hours per week (or upwards) regularly and systematically whilst employed by Swift. Upon being employed by Kingfisher, Mr Kruger was employed as a full time permanent employee.

[27] In 2017 the State government put the operation of the Lyrup ferry out for competitive tender. Kingfisher won the tender, to commence from 1 November 2017. Swift had, initially at least, also tendered for the work.

[28] There was no corporate, business or organisational connection of any kind between Kingfisher and Swift. They are competitors.

[29] Upon losing the contract to operate the Lyrup ferry, Swift removed its materials from the ferry site, leaving only the assets owned by the State government.

[30] Upon becoming the contracting business, Kingfisher supplied its own materials at the ferry site such as a tool kit, cleaning materials and fridge.

[31] At no time did Kingfisher enter into a contract or arrangement with Swift relating either to plant, equipment, materials or labour.

[32] After being advised it was the successful tenderer, in about September 2017 Mr Davis of Kingfisher met Mr Kruger at Morgan to discuss his willingness to be employed by Kingfisher from 1 November 2017 when it was to take over operation of the ferry. Mr Davis informed Mr Kruger that he would be introducing some different labour arrangements such as permanent rather than casual employment and new rosters. Mr Kruger verbally agreed to be employed by Kingfisher.

[33] On 2 October 2017 Mr Kruger signed an ‘Employment Agreement for Permanent Employees’ that had been supplied by Kingfisher. 3

[34] There was no discussion between Kingfisher and Swift about the terms under which Mr Kruger might be employed.

[35] There was no discussion between Kingfisher and Mr Kruger about whether service with Swift or any other prior employer would be continuous. Mr Davis of Kingfisher was operating under the belief that prior service would not be counted for any purpose but this was not a matter discussed directly or indirectly.

[36] Mr Kruger commenced work for Kingfisher on 1 November 2017 as a permanent full time employee. All persons employed by Kingfisher, including Mr Kruger, were placed on a 3 month probation.

[37] On 1 February 2018 Mr Davis telephoned Mr Kruger and advised him that his employment would not be continued beyond the probationary period. He finished work on that day and was paid until 7 February 2018.

[38] By letter dated 31 January 2018 but sent under cover of an email dated 2 February 2018, Mr Davis confirmed his notice of termination in writing.

[39] Mr Kruger filed proceedings in the Commission on 14 February 2018.

Consideration

[40] I now consider the application of these facts to the provisions of the FW Act in order to determine whether Mr Kruger has completed the required minimum employment period.

[41] In this matter Kingfisher and Swift are not associated entities for the purposes of the FW Act. The FW Act definition of “associated entities” (section 12) is drawn from section 50AAA of the Corporations Act 2001. None of the criteria in the Corporations Act are made out. Kingfisher and Swift are not related bodies corporate. There is no control over the other or capacity to determine decisions of the other.

[42] Therefore this matter is to be determined by reference to the statutory rules concerning non-associated entities.

[43] It firstly needs to be decided if Mr Kruger was a transferring employee and whether there was a transfer of business between Swift and Kingfisher. If these are established then Mr Kruger’s service with Swift was continuous once he became employed by Kingfisher. 4

[44] Then, and only then, would it need to be decided whether Kingfisher took the step of notifying him in writing prior to his employment commencing that his service would not be counted for the purpose of the minimum employment period (section 384(2)(b)(iii)). If that had not occurred (and the aforementioned preconditions were met), then his service would be counted for present purposes. 5

[45] As noted, a transfer of business takes its meaning from section 311(1) of the FW Act.

[46] On the facts in this matter, sections 311(1)(a), (b) and (c) are made out. Mr Kruger’s employment with Swift was terminated; within 3 months he came to be employed by Kingfisher; and the work he performed was the same or substantially the same. Therefore Mr Kruger is a “transferring employee” (section 311(2)).

[47] However, is there “a connection between the old employer and the new employer” as described in any of sub-sections 311(3) to 311(6)?

[48] On the facts in this matter, there is no arrangement of any kind between Kingfisher and Swift let alone an arrangement concerning the beneficial use of assets. Kingfisher came to be conducting the business by being a successful tenderer in competition to Swift. Sub-section 311(3) is not made out.

[49] On the facts in this matter, Mr Kruger did not come to be employed by Kingfisher because of an outsourcing arrangement by Swift. Sub-section 311(4) is not made out. In support of his case Mr Kruger refers to a letter from Mr Brown of Swift dated 16 February 2018. 6 That letter, provided to Mr Kruger to support his application to the Commission, provides that “at the end of my contract all current staff were offered a positions (sic) with the new contractor therefore providing continuation of service.” Mr Brown was not called to give evidence. I have noted that it is not in dispute that Mr Kruger was employed by Kingfisher immediately Mr Davis became the successful business contractor. There mere fact that employment commences with a new employer does not characterise an arrangement as a transfer of business between an old business and the new business. It is only a transfer of business if section 311 is made out. Mr Davis gave evidence, which I accept, that there was no outsourcing arrangement. As there was outsourcing arrangement by Swift, section 311(4) is not made out.

[50] Likewise, on the facts in this matter, Mr Kruger had not been employed by Swift because of an outsourcing arrangement with Kingfisher which Kingfisher then ceased. Sub-section 311(5) is not made out.

[51] As noted, on the facts in this matter, Kingfisher and Swift are not associated entities. Sub-section 311(6) is not made out.

[52] I therefore conclude that although Mr Kruger was a “transferring employee”, there was no “transfer of business” within the meaning of the FW Act between Swift and Kingfisher. Thus, Mr Kruger was not a transferring employee “in relation to a transfer of business” within the meaning of section 384(2)(b)(i) of the FW Act. 7

[53] In these circumstances it does not need to be decided whether Kingfisher took the step of notifying him in writing prior to his employment commencing that his service would not be counted for the purpose of the minimum employment period (section 384(2)(b)(iii) of the FW Act).

Conclusion

[54] As there was no transfer of business then there was no “transfer of employment” within the meaning of the section 22(7)(b) of the FW Act.

[55] As there was no transfer of employment then Mr Kruger’s period of service with Swift does not count as “continuous service”.

[56] Accordingly, Mr Kruger’s period of continuous service within the meaning of the FW Act was only three months. This being a period less than the minimum employment period, Mr Kruger was not a person protected from unfair dismissal at the date his employment was terminated.

[57] That being so, the Commission has no jurisdiction to hear and determine the application. The application is dismissed. I issue an order to this effect in conjunction with the publication of this decision.

DEPUTY PRESIDENT

Appearances:

K. Kruger, on his own behalf, and R. Godfrey, for the Applicant

M. Davis, for Kingfisher Ferry Services

Hearing details:

2018.

Adelaide; by telephone.

19 April.

Printed by authority of the Commonwealth Government Printer

<PR602184>

 1   Directions, Deputy President Anderson, 20 March 2018

 2   Wales v 3 Point Motors Pty Ltd T/A 3 Point Motors [2012] FWA 3817 at [28]

 3   A3

 4   Burdziejko v ERGT Aust Pty Ltd [2015] FWC 2308

 5   Gregory v Shaver Shop Pty Ltd [2016] FWC 1323

 6   A5

 7   Tiaki v Yarra City Council [2018] FWC 214