Employment & Safety

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Employment & Safety

21 January 2019

In this issue: we look at what counts as employee service after a transfer of business; when summary dismissal for calling another worker a 'scab' is unfair; an employer's power to require reasonable overtime; when an individual flexibility arrangement that doesn't meet the relevant legal requirements can still apply; and the latest on unpaid family and domestic violence leave, and flexible working arrangements.

Service with labour hire company counts after a transfer of business

In brief: The Fair Work Commission (the FWC) has decided that an employee's service with a labour hire company will count as service with his new employer following a transfer of business.1 Managing Associate Andrew Stirling and Associate Jessica McDonald report.

How does it affect you?

If there is a transfer of business, an employee's service with the old employer will count as service with the new employer. There can be a transfer of business if the employee's work is transferred from a labour hire company to an associated entity of the host.
New employers can avoid recognising a transferring employee's previous employment with a non-associated entity (eg the labour hire company), for the purposes of calculating annual leave, redundancy pay and unfair dismissal qualification, by informing the employee in writing before they commence employment.


In April 2016, Staff Australia engaged Mr Taulapapa to work at a warehouse. In early 2017, Toll Transport was contracted to operate the warehouse. It continued to receive labour hire, including Mr Taulapapa, from Staff Australia.

In early 2018, Toll Transport ceased to outsource Mr Taulapapa's work to Staff Australia. Instead, he commenced employment with Toll Personnel (an associated entity of Toll Transport). Toll Personnel did not inform Mr Taulapapa in writing that the new employer would not recognise his service with Staff Australia.

In June 2018, Mr Taulapapa's employment came to an end and he filed an unfair dismissal claim.

The decision

Mr Taulapapa had less than six months' service with Toll Personnel. For him to be eligible to bring an unfair dismissal claim, his service with Staff Australia needed to count as service with Toll Personnel.

For this to be so, there needed to be a transfer of business between Staff Australia and Toll Personnel. Mr Taulapapa argued that there was a transfer of business, on the basis that Toll Personnel had ceased to outsource work to Staff Australia. Toll Personnel argued that it could not have ceased to outsource work to Staff Australia, as it had never outsourced work to Staff Australia.

In this case, it was significant that Toll Transport and Toll Personnel were associated entities. The FWC decided that, because Toll Transport was an associated entity of Toll Personnel, it was sufficient that Toll Transport ceased to outsource Mr Taulapapa's work to Staff Australia.

Since Mr Taulapapa's service with Staff Australia counted as service with Toll Personnel, he had sufficient service to bring an unfair dismissal claim.

  1. Ricky Taulapapa v Toll Personnel Pty Limited [2018] FWC 6242.

Dismissal for scab-calling unfair

In brief: The Full Bench of the FWC decided that an employer's decision to summarily dismiss an employee for calling another worker a 'f***ing scab' during protracted industrial disputation was unfair.1 Senior Associate Tarsha Gavin reports.

How does it affect you?

This decision reinforces the FWC's willingness to consider a range of other factors when assessing whether a dismissal is harsh.
Relevant factors can include: the employee's prior disciplinary record; whether other employees engaging in similar conduct have also been dismissed; and the personal impact of the dismissal on the employee.


Mr Gelagotis and Mr Hatwell were employees of Esso Australia Pty Ltd. Following a change in maintenance contractors at Esso's Longford site, former contractors were offered employment with the new contractor (UGL) on less favourable terms. A period of protracted industrial disputation followed, during which the relevant unions formed a protest line outside the Longford site. UGL employees (who had accepted the employment offers) who drove past the line on their way to and from work were called various derogatory terms, including 'scab'.

During this period, Esso summarily dismissed Mr Gelagotis and Mr Hatwell for engaging in behaviour that was harassing, intimidating or bullying in nature. Mr Gelagiotis had instigated the removal of a UGL contractor from the Esso lunchroom because he had accepted UGL's employment offer. Mr Hatwell had called a UGL employee a 'f***ing scab'. The use of this language contravened Esso's harassment policy.

At first instance, the FWC held that both Mr Gelagotis and Mr Hatwell were not unfairly dismissed, as their conduct constituted a valid reason for dismissal, and there were no factors that rendered that decision harsh, unjust or unreasonable.

The decision

Mr Gelagotis and Mr Hatwell sought permission to appeal from the Full Bench of the FWC.

Mr Gelagotis was denied permission to appeal. In relation to Mr Hatwell, despite agreeing with the Deputy President's finding that there was a valid reason for dismissal, the Full Bench determined there was an appellable error, as the evidence before the Deputy President was 'so clearly in favour of a finding that the dismissal was harsh'. In reaching this conclusion, the Full Bench had regard to the following factors:

  • there had been only a single contravention of Esso's harassment policy;
  • the Esso representative responsible for determining the disciplinary outcome for Mr Hatwell had given evidence that she would not have dismissed an employee for a single use of the word 'scab';
  • there was evidence that two other Esso employees who had used language like 'scab' and 'grub' had only received first and final warnings;
  • Mr Hatwell had an unblemished disciplinary record during his 10 years of employment; and
  • the investigation and dismissal had 'very significant effects' on Mr Hatwell and his family.

Mr Hatwell's appeal was upheld and the matter remitted to the Deputy President to determine a remedy.

  1. Gelagotis and Another v Esso Australia Pty Ltd [2018] FWCFB 6092.

Federal Court rules on employer's power to require reasonable overtime

In brief: In considering the terms of an enterprise agreement allowing an employer to require reasonable overtime, the Full Federal Court decided that the employer's increase in the number of overtime hours could constitute a breach of the agreement.1 Senior Associate Tarsha Gavin and Lawyer Millie Grant report.

How does it affect you?

Clauses in enterprise agreements that are permissive in character (such as allowing an employer to require an employee to work reasonable overtime) can still contain obligations or restrictions on the actions that an employer can take.
An enterprise agreement is likely to be interpreted to allow a 'sensible industrial outcome'.


The Construction, Forestry, Maritime, Mining and Energy Union alleged that an employer, Hays Point Services (HPS), had breached the terms of an enterprise agreement by implementing a roster that required employees to work up to 455 overtime hours per year (or 8.7 hours per week). This was beyond the definition of reasonable overtime in the agreement, which was approximately 104 hours of overtime per year.

The enterprise agreement relevantly stated that:

HPS may require an employee to work reasonable overtime and the employee shall work such overtime as required.

A judge of the Federal Court decided this clause was permissive in character and did not impose any obligation on HPS to provide only reasonable overtime. The use of the word 'may' left it open for HPS to require an employee to work beyond 'reasonable overtime'. For this reason, HPS had not breached the agreement. At that stage, it was unnecessary to consider whether the requirement that employees work 455 hours of overtime per year was 'unreasonable overtime'.

The decision

On appeal, the Full Court of the Federal Court disagreed with the earlier decision. The Full Court decided that the word 'reasonable' imposed a restriction on the overtime that HPS 'may require'. The clause 'does not solely provide for an entitlement to HPS, but is also protective of the interests of employees'.

The court considered a previous decision (Amcor2), which provided that the interpretation of enterprise agreements should not be strict but contribute to a 'sensible industrial outcome.' As it was made under the Fair Work Act 2009 (Cth), the agreement should be presumed to be consistent with the Act. Since the National Employment Standards (the NES) limit the maximum hours employees may work, it should be presumed that the restriction imposed on HPS was the only 'sensible industrial outcome.'

Whether the 455 hours of overtime per year was 'unreasonable overtime' was remitted back to the primary judge for determination.

  1. Construction, Forestry, Maritime, Mining and Energy Union v Hay Point Services Pty Ltd [2018] FCAFC 182.
  2. Amcor Limited v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at [96].

Defective IFA survives to defeat underpayment claim

In brief: The Federal Circuit Court rejected a truck driver's underpayment claim, finding that the terms of an individual flexibility arrangement (IFA) applied to his employment, despite it not complying with the relevant legal requirements.1 Senior Associate Stephanie Burn and Lawyer Sarah Lunny report.

How does it affect you?

IFAs can be used to vary certain terms of modern awards to suit the individual needs of an employer and employee.
If the employer and employee genuinely agree to an IFA, it applies as if it is a term of the award, even if its contents do not comply with all of the legal requirements for IFAs.


K&S Freighters Pty Ltd (K&S) employed Mr Robinson as a fuel-tank driver. When he accepted the offer of employment with K&S, he believed it was conditional on him entering into an IFA that altered the provisions concerning pay rates, allowances, ordinary hours of work, and rostering in the Road Transport and Distribution Award 2010.

Mr Robinson subsequently resigned and brought an underpayment claim, alleging the IFA was defective and he should have been paid according to the award.

He argued that the IFA was defective because, contrary to the Fair Work Act:

  • it was entered into after he commenced employment; and
  • he felt under duress to accept it and therefore had not genuinely agreed to it.

The decision

The court found that the IFA still applied, even though it was not entered into after Mr Robinson commenced employment, and despite his offer of employment being conditional upon his acceptance of the IFA. Mr Robinson entered the IFA and did not exercise his right to terminate it.

The IFA permitted Mr Robinson to work a 38-hour week. His underpayment claim was calculated on the basis of the 35-hour week specified in the award. The court decided that the IFA applied and it permitted a 38-hour week; therefore, there had not been any underpayments.

  1. Robinson v K&S Freighters Pty Ltd [2018] FCCA 2642.

Update on unpaid family and domestic violence leave, and flexible working arrangements

In brief: Since December 2018, all employees are entitled to unpaid family and domestic violence leave under the NES. Employers should also be aware of the new modern award requirements to discuss flexible working arrangements with employees. Senior Associate Tegan Ayling reports.

How does it affect you?

From 12 December 2018, all employees, including casuals and part-time employees, are entitled to unpaid family and domestic violence leave under the NES.
From 1 December 2018, an employer who receives a request for flexible working arrangements from an award-covered employee must discuss it, and genuinely try to reach agreement, with the employee before responding in writing to the request within the 21-day timeframe.

The changes

Domestic violence leave

Early last year, we saw unpaid family and domestic violence leave become a modern award entitlement for award-covered employees. Now, all employees – including those not covered by an award – are entitled to five days' unpaid family and domestic violence leave per year under the NES. The NES entitlement is consistent with the modern award entitlement, which we reported on in our Are your employees entitled to unpaid family and domestic violence leave?

Procedural changes to managing a flexible working request

The FWC introduced changes to modern awards, to require an employer who receives a request from an award-covered employee for a flexible working arrangement (eg a change to hours or location) to take additional steps. From 1 December 2018, the employer must now:

  • discuss the request with the employee; and
  • try to reach agreement with the employee, taking into account their needs, the consequences if there is no change, and any reasonable business grounds the employer has for refusing the request,

before responding in writing to the request. While the changes do not specify when the discussion must occur, since the employer is still required to respond to the request in writing within 21 days of receiving the request, the discussion would need to occur within that time.

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