Engaging a labour hire employee – the Fair Work Commission’s view on ‘outsourcing’
If you offer permanent employment to a temp worker, then the worker may get unfair dismissal rights, and sooner than you would have thought.
Usually, when you take on a new employee, you would expect that the employee would not have unfair dismissal rights until the employee had served the standard minimum employment period – 6 months, or 12 months for ‘small business’ employers with less than 15 employees. However, service with a prior employer may count towards the minimum employment period when the work was outsourced and is brought inhouse.
The Fair Work Act has a broader application than we think: The ‘transfer of business’ provisions don’t just affect business purchasers, they also affect employers offering permanent employment to their ‘temp’ workers. This happened in the case of Burdziejko v ERGT Australia Pty Ltd [2015] FWC 2308 (1 April 2015).
In June 2014 ‘ERGT Australia,’ a National Oil and Gas safety training specialist, had secured a new client. They required an additional employee in their Melbourne branch. Rather than sourcing the employee in-house, they decided to outsource the work with ‘Hays’ labour hire provider. Hays sent them Nicole Burdziejko, who worked at ERGT as a temp customer service officer from June to September 2014. In September Nicole was offered a permanent position with ERGT and by December of 2014 was dismissed. Burdziejko lodged an unfair dismissal claim with the Fair Work Commission (FWC). She said her work with ERGT through Hays counted towards the minimum employment requirement of 6 months. The Court agreed. The Court said Burdziejko’s employment was continuous under the FW Act transfer of business provisions.
So what is a transfer of business?
Under the FW Act a transfer of business occurs when the following conditions are satisfied:
(1) employment is terminated
(2) the new employer hires that employee within 3 months of termination
(3) the work is ‘tranfered’ (the employee’s duties remain largely identical), and
(4) a sufficient connection exists between a new employer and an old employer
For a sufficient ‘connection’ to be found, at least one of the following must be true:
- There is an arrangement between the new and old employers that allows the new employer to own, or have access to, at least some of the old employer’s assets that relate to the transfer of work
- previously outsourced work is now performed in-house
- previously in-house work is now outsourced
- the old and the new employers are both associated entities under s 50AAA of the Corporations Act 2001
Was there a sufficient connection between Hays and ERGT?
There was a sufficient connection between Hays as a labour hire provider and ERGT as an employer under section 311 of the FW Act. Burdziejko was initially contracted by Hays to work at ERGT and was offered a permanent position there after three months. The FWC identified Hays as the ‘old employer’ and ERGT as the ‘new employer’.
Gooley DP, in Burdziejko v ERGT, noted that the FW Act did not provide a specific definition for the word ‘outsource’. Gooley interpreted it according to its meaning in Macquarie dictionary, ‘to contract (work) outside the company rather than employ more in-house staff’.
Burdziejko was performing substantially the same duties when she transitioned from Hays to ERGT and was not advised that her time at Hays would not count towards her overall service time with ERGT.
Lessons for Employers
Employers should get legal advice and remain vigilant when offering ongoing positions to temp workers, and should give written advice that past service will not be recognised with the new employer.
Peter McNamara
Principal
You can read the full case of Burdziejko v ERGT Australia Pty Ltd [2015] FWC 2308 (1 April 2015) here: https://www.fwc.gov.au/documents/decisionssigned/html/2015FWC2308.htm