The Case

Ricky Taulapapa v Toll Personnel Pty Limited (2018)

During 2016, Staff Australia employed Mr Taulapapa to work at a warehouse. During 2017, Toll Transport Pty Ltd (Toll Transport) entered into a contract to operate the warehouse. Toll Transport continued to receive labour hire from Staff Australia, including Mr Taulapapa.

In 2018, Mr Taulapapa commenced employment with Toll Personnel (an associated entity of Toll Transport) working in the warehouse. Toll Transport had decided to cease outsourcing the work to Staff Australia. Toll Personnel did not notify Mr Taulapapa in writing that it would not recognise his prior service with Staff Australia.

Within 3 months of commencing employment with Toll Personnel, Mr Taulapapa’s employment was terminated. Mr Taulapapa commenced unfair dismissal proceedings.

The Verdict

Toll Personnel argued Mr Taulapapa could not bring an unfair dismissal claim as he had not been employed for 6 months.

Mr Taulapapa argued his prior service with Staff Australia should be counted as part of his service with Toll Personnel. Mr Taulapapa argued there was a transfer of business between Staff Australia and Toll Personnel when Toll Transport ceased outsourcing work to Staff Australia. Mr Taulapapa argued because Toll Transport and Toll Personnel were associated entities, it was sufficient that Toll Transport ceased to outsource Mr Taulapapa’s work to Staff Australia.

The Fair Work Commission found that Mr Taulapapa’s service with Staff Australia counted as service with Toll Personnel.

As such, he was able to bring an unfair dismissal claim.

The Lessons

A transfer of business can occur when you cease outsourcing labour through a labour hire company and employ the worker directly or through an associated entity.

The employee’s service with the labour hire company will be recognised unless you inform the employee in writing before they commence employment that the prior service with the labour hire company will not be recognised. This is important not only for protecting your business from a premature unfair dismissal claim, but also for the purposes of calculating other service-related entitlements, such as leave and redundancy pay.

Please note: Case law is reported as correct and current at time of publishing. Be aware that cases in lower courts may be appealed and decisions subsequently overturned.