FWC explores how changing employers affects unfair dismissal eligibility
The Fair Work Commission (FWC) recently dealt with an unfair dismissal claim where the key issue was whether the worker had completed the minimum employment period required to be protected from unfair dismissal under the Fair Work Act 2009.
The case turned on whether employment across three related barbershop businesses could be counted as continuous service, and how a period of unpaid leave affected the calculation of the minimum employment period.
On 28 April 2024, the worker applied to the FWC for an unfair dismissal remedy after his employment ended on 9 April 2024.
His employer raised a jurisdictional objection, arguing he hadn't completed the one-year minimum employment period required for small business employees.
Pay records showed he received payments from three companies: The Conductor Pty Ltd from October 2022 to February 2023, Elephant Stone Pty Ltd from February to March 2023, and Nicky's Barbershop Pty Ltd from March 2023 to April 2024, with a period of unpaid leave.
Under section 22 of the Fair Work Act, the Commission noted that while unpaid leave doesn't count toward service length, it doesn't break continuous service:
"By s22(3), this excluded period does not break [the worker's] continuous service with [the employer] but does not count towards the length of [the worker's] service."
Company searches revealed interconnected ownership. One director held significant positions across all three businesses - director and secretary of the first with five shares, sole shareholder of the second, and co-director with equal shareholding in the third.
The Commission examined whether there was a "transfer of employment" under section 22(7) of the Fair Work Act, which required the companies to be "associated entities" when the transfers occurred.
As the Commission noted: "It would be passing strange if [the director] could style himself as a Director of two companies, sack someone from two companies, and then refute the idea that the companies were associated."
The Commission found that all three companies were "associated entities" under section 50AAA(7) of the Corporations Act 2001, as referenced by the Fair Work Act.
"I am satisfied that [the three companies] are associated entities under s 50AAA(7) of the Corporations Act. [The director] as a 'third entity' controls all three companies. The operations, resources and affairs of each of them are material to him," the Commission stated.
In dismissing the jurisdictional objection, the Commission concluded: "I have found the period of employment of [the worker] was over one year by reason of the transfer of employment from [the first employer] to [the second employer] and then from [the second employer] to [the third employer]." The matter was set to proceed to determination on its merits.
