Eleven years’ experience...  but still on probation

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Eleven years’ experience... but still on probation

A ferry operator with 11 years' experience has lost his case for unfair dismissal because he did not complete the minimum probationary period.

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A ferry operator has lost his case for unfair dismissal because he did not complete the minimum probationary period. Although he had been an operator for 11 years, he had worked under different tender contractors. 

Background 


Mr K (the applicant) was employed as an operator of a passenger ferry carrying vehicles over the River Murray at Lyrup in South Australia. The ferry is owned by the South Australian government through the State Department of Planning, Transport and Infrastructure (the state government).

The state government contracts the operation of the ferry by competitive tender to private contractors. These contractors employ ferry operators. The state government plays no role in regulating the terms of employment of persons employed by the private contractors. 
 
Mr K worked as a ferry operator for the following private contractors: 

a) Mr Watts between 2006 and 2012
b) Swift between 2012 and 31 October 2017

In October 2017 Swift lost the tender to competitor, Kingfisher (the respondent).

There was no corporate, business or organisational connection of any kind between Swift and Kingfisher. When Swift lost the contract to operate the Lyrup ferry, it removed all of its materials from the site, leaving only the assets owned by the state government. When Kingfisher became the contractor, it supplied its own materials such as a tool kit, cleaning materials and fridge. Kingisher did not enter into any contracts with Swift about plant, equipment, materials or labour. 

Kingfisher then offered Mr K a permanent position. However, on 1 February 2018, Mr K was informed that his contract with Kingfisher would not extend beyond the probationary period. He subsequently lodged an unfair dismissal claim.

Law 


Section 382 of the Fair Work Act states that protection from unfair dismissal requires that an employee complete the minimum probationary period. For small businesses (fewer than 15 employees) that period is 12 months, and six months for larger businesses. 

The Fair Work Act also helps to protect employees from being dismissed when there is a transfer of business from one employer to another employer. A transfer of business will happen, for instance, when one company buys another company.

Section 22 of the Act deems that the period of service with a former employer counts as service with a new employer if the employees transfer along with the business that has been bought. 

Certain conditions must be fulfilled for a “transfer of employees” to be effective. The worker’s employment with the old employer must have ended. Then, within three months of that termination, the worker must have become employed by the new business. The work that is done for the new employer must be substantially the same as the work done for the old employer. And there must also be a “connection” between the old employer and the new employer. That connection could exist, for instance, if the new employer uses any of the tangible or intangible assets of the old employer. There is also a connection if the old employer outsources work to the new employer. 

Arguments 


The applicant argued that he had been unfairly dismissed. Kingfisher argued that Mr K was not protected from unfair dismissal because he had not completed the minimum employment period. In response, Mr K argued that his service with prior employers should be taken into account, which would mean he had completed the minimum employment period. 
  

Legal questions


The Commission had to decide if Mr K’s previous period of employment could count as service with the new employer so as to complete the minimum employment period. It therefore had to decide whether there was a transfer of business and whether the applicant was a transferring employee. If so, the Commission said, then the applicant's period of service between the two employers would have been continuous. 
 

Considerations 


Mr K started work with Kingfisher within three months of the end of Swift’s contract and the work he performed for the new employer was the same or substantially the same as the work done for the previous employer. Therefore Mr K was a "transferring employee". 

However, there were no arrangements of any kind for the new employer to use any of the assets of the old employer and there was no outsourcing arrangements between the two employers. As there was no connection between the two employers, it was found that there was no transfer of business and therefore the previous period of service did not count as service with the new employer. 

Decision

Mr K's period of service with the new employer was only three months and did not meet the minimum employment period. Mr K was therefore not protected from unfair dismissal and the commission ruled that it had no jurisdiction. The application was dismissed.

The bottom line: Workers who complete a six month probationary period (12 months in small businesses) are protected from unfair dismissal. Periods of service between two different employers can count toward that probationary period if there is a transfer of business, and a transfer of employees, from the old employer to the new employer. This is a very complex area of law and legal advice should be sought if managers are contemplating dismissing workers who come into the employ of the organisation as a consequence of some kind of corporate acquisition. 
 

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