Transition from direct employment to labour hire muddles worker's entitlements
The Queensland Industrial Relations Commission (QIRC) recently dealt with a case involving long service leave entitlements and the concept of "transfer of calling" in the context of labour hire arrangements.
The case revolved around a worker who had been employed at the same poultry farm for 17 years, but under different employment arrangements.
The worker sought long service leave payments from his current employer, arguing that his service should be considered continuous despite periods of employment through a labour hire company.
The employer disputed this claim, leading to a detailed examination of employment continuity and transfer of business principles.
Background and employment history
The worker had an extensive history with the employer, spanning three distinct periods:
- Direct employment from March 2005 to 2007
- Employment through a labour hire company from 2007 to November 2017
- Direct re-employment from November 2017 onwards
Throughout these periods, the worker performed duties exclusively at the employer's poultry farm. The case centred on whether the worker's service should be considered continuous for the purposes of long service leave entitlements.
In 2009, the employer made an operational change to streamline its HR section and outsource HR management due to business growth.
This led to the termination of direct employment for many workers, including the applicant, who were then offered roles under the labour hire company.
Worker's argument: Continuity of service
The worker's primary argument was that his employment with the labour hire company should be recognised as continuous service with the employer.
He contended that:
- The employer had interrupted his employment to avoid long service leave obligations
- Alternatively, there had been a "transfer of calling" between the labour hire company and the employer
The worker pointed to a certificate he received recognising 17 years of service as evidence of continuity.
He also argued that the employer's intent to avoid long service leave obligations was evident in the engagement documents and cross-examination testimony.
Employer's defence: Separate entities and agreements
The employer maintained that:
- The labour hire period broke the worker's continuity of service
- The 2017 employment offer explicitly stated that service with the labour hire company would not be recognised
- There was no "transfer of calling" between the labour hire company and the employer
The employer argued that the decision to engage the labour hire company was made to access HR expertise and manage complex requirements, not to avoid long service leave obligations.
Legal framework and key considerations
The Commission examined several key legal principles, including:
- The definition of "transfer of calling" under the Industrial Relations Act 2016 (Qld)
- Precedents from cases involving similar employment transitions
- The nature of the businesses involved (poultry farming vs labour hire)
The Commission also considered the Australian Workplace Agreement (AWA) and Collective Workplace Agreement (CWA) that governed the worker's employment during different periods.
The Commissioner considered the evidence and arguments presented by both parties. This included testimony from the worker, the employer's managing director, the office manager, and directors of the labour hire company and related entities.
The Commissioner found that the employer's decision to enter into the labour hire arrangement was primarily driven by two factors:
- To allow employees to maximise their earning capacity by working additional hours without attracting overtime rates
- To outsource HR functions as the business grew
Ultimately, the Commissioner concluded that:
- There was insufficient evidence to prove the employer intended to avoid long service leave obligations
- The labour hire company and the employer were separate entities with distinct business purposes
- No "transfer of calling" had occurred as defined by the legislation
“I understand that [the worker] is in possession of a certificate recognising 17-years of work at [the employer]. It is not in dispute that [the worker] worked at [the employer] for 17-years. That certificate is evidence that [the worker] has an extensive working history in connection with [the employer], however, it does not account for the discrete Employment Periods, namely, his employment with [labour hire company]. The certificate is not evidence that there has been a transfer of calling,” the Commission said.
The Commissioner clarified that any potential long service leave entitlements from the labour hire period would be the responsibility of the labour hire company, not the current employer.
This decision was based on the distinct nature of the businesses involved and the lack of evidence supporting a transfer of calling.
The Commission ultimately dismissed the worker's application. This case highlights the complexity of long service seave entitlements in situations involving labour hire arrangements and business transitions.
It emphasises the importance of clear employment contracts and the specific legal requirements for establishing a "transfer of calling" in employment law.
For employers and HR professionals, this case underscores the need to carefully consider the implications of labour hire arrangements and to clearly document employment transitions.
It also demonstrates the potential challenges in determining continuity of service when employees work for the same organisation under different employment structures.
