You’ve Just Bought The Business. Here’s Why You Should Inform Transferring Employees That Their Previous Service Won’t Be Recognised?

A number of applications were filed against Serco Australia Pty Ltd (the Company) in relation to unfair dismissals (Iftehar Ahmed, John Coker, Van Lieu, Mario Pires, Richard Eyles, Saleem Ahmed, Christopher Delaney v Serco Australia Pty Ltd).

The representative for Company submitted that their employment with the previous detention centre should not count as service with the Company ….as there has been neither a transfer of service nor a transfer of business between [the previous detention centre and the Company].

The Company objected to the applications on the grounds that the seven former employees had not completed the minimum employment period (currently 6 months for employers with more than 15 employees) under the Fair Work Act 2009 (the Act). At the time of termination the employees had served 5 months of employment with the Company.

Vice President (VP) Watson of Fair Work Australia (FWA) considered the relevant sections of the Act and Section 384(b) in particular relates to transferring employees and whether service with the former employer will be recognised as service with the new employer. This section states that service with the former employer does not count towards an employee’s period of employment with the new employer

Section 384

(b) if:

(i)…..

(ii) the old employer and the new employer are not associated entities…..;and

(iii) the new employer informed the employee in writing before new employment started that a period of service with the old employer would not be recognised;

The Company argued that the letters of appointment at 1(c) given to employees satisfied this component of the Act as follows:

You will not be required to serve a period of probationary employment. Nevertheless, as your position at Serco is a new contract of employment, all qualifying periods set out in the Fair Work Act 2009 and the Serco Immigration Detention Centres Agreement 2009 will apply.

VP Watson stated that - based on the above section of the letters of appointment - ….employees in receipt of that letter would and should have understood that the qualifying period of,….employment would need to be served ….in order for employees to be able to access the unfair dismissal remedy in the Act.

VP Watson found that the applicants did not have the requisite period of employment and the applications were dismissed.