A warning to all unions – unfair dismissal after a transmission of business

A warning to all unions – unfair dismissal after a transmission of business

A Full Bench of the Australian Industrial Relations Commission has recently held that a group of transferring employees had no right to pursue an unfair dismissal claim when they were sacked less than six months after the transmission of a business occurred. The four aged care workers had been employed by Professional Aged Care Enterprises Pty Ltd before the sale of the business to Aged Care Services. As a result of the sale, the employees’ industrial instruments transmitted to the new employer and the new employer told the employees that previous service would be recognised and that it would assume responsibility for all accrued entitlements.

The employees were not paid any redundancy payment on transmission. The four employees were subsequently notified by Aged Care Services, during the six month qualifying period that their employment was terminated. They were paid the appropriate notice and accrued entitlements. As the employees were not redundant they did not receive any redundancy payment from their new employer. The employees lodged an application alleging that the termination of their employment was unfair as well as unlawful.

The Workplace Relations Act 1996 (“the Act”) provides at section 643(6) that an employee cannot make an application to the Commission for relief in respect of the termination of their employment on the grounds that the termination was harsh, unjust or unreasonable if the employee has not completed a “qualifying period of employment”. A qualifying period of employment is defined as “six months or a shorter period, or no period, determined by written agreement between the employee and employer before the commencement of the employment”.

Commissioner Whelan at first instance held that transferring employees’ service with their predecessor employer counted towards the six month qualifying period and that the employees could proceed with their claim.

On appeal, this interpretation was rejected by all members of the Full Bench who found that only the period of employment with the new employer is relevant. One member of the Full Bench dissented and dismissed the appeal having found that there was a written agreement made in advance that there would be no qualifying period.

However the majority dismissed the unfair dismissal claim because the employees had not completed the qualifying period. The claim for unlawful termination can proceed.

[Aged Care Services Australia Group Pty Ltd v Ziday and others [2008] AIRCFB 367]

What can unions do?

1. Ensure that in every transmission of business the written offer of employment received by employees expressly provides that the employment is offered on the basis that there is no qualifying or probation period.

2. Include in the next collective agreement a provision that in the event of a transmission of business, if an employee who was a transferring employee is terminated during the qualifying or probationary period, except if the employee is terminated for serious misconduct, the employee shall be paid an amount equivalent to the amount the employee would have received as redundancy pay if the employee had not become a transferring employee.

3. Lobby the Federal Government to amend the Act to provide that transferring employees do not have to serve a qualifying period or period of probation.

4. If that is not accepted lobby the Federal Government to amend the National Employment Standard to provide that if a transferring employee is required to serve a qualifying period or probationary period they are entitled to a redundancy payment from their previous employer.

Please contact Anne Gooley on (03) 9605 2730 if you would like any additional information.

-courtesy of Maurice Blackburn Lawyers.