Minimum period of employment, absences and unfair dismissal

Which absences from work count (or don’t count) as service, with respect to the minimum period of employment under federal unfair dismissal laws?

There are a number of preliminary matters that must be clarified before Fair Work Australia (FWA), before an application relating to unfair dismissal can be heard. One of these matters relates to the minimum period of employment that must be served by the applicant with the employer. To access unfair dismissal laws, an employee whose employer employs 15 employees or more must have served at least six months of employment with the employer or, in the case of an employee whose employer employs fewer than 15 employees, 12 months of service with the employer. While the Fair Work Act 2009 provides a definition of service and continuous service for the purposes of the Act, which absences from work, and what types of employment, count as service with respect to the minimum period of employment, has been the subject of some conjecture, with a number of matters being determined by FWA on this issue. A case before FWA regarding an employee receiving income protection payments from their superannuation fund, reported recently by WorkplaceInfo, illustrates a circumstance that required clarification by the tribunal regarding the meaning of service in relation to the minimum period of employment.

Number of employees – In determining whether the employer employs 15 employees or more at a particular time, all employees (including casuals employed on a regular and systematic basis) employed at that time are to be counted as well as the employee(s) being dismissed, but excluding a casual employee who has not been employed on a regular and systematic basis.

Associated entities

As a jurisdictional point, an issue for FWA to determine is whether or not the employer has within its company structure any associated entities and, if it does, whether those associated entities employ any persons who should be included in determining the number of employees employed by the employer at the particular time.

FWA determined that that the question of ‚ ≤associated entities’ is contemplated by the definition of ‚ ≤control’ in the Cth Corporations Act 2001 (s50AA). Control means direction or influence over the operations of the associated entity. See: A v Condamine Catchment Natural Resource Management Corporation Ltd t/a Condamine Alliance [2010] FWA 5374.

Period of employment – The minimum period of 6 months or 12 months (as the case may be) must be completed immediately before the beginning of the corresponding day of the sixth month (or twelfth month) following the date on which the employee’s employment commenced. For example, an employee who commenced employment on 26 February and is terminated at 9 am on 25 August has not completed 6 months service and is unable to claim unfair dismissal. See: P v Manheim Fowles Pty Ltd [2010] FWA 28.

Casual employment – The Fair Work Act (s384(2)) states that a period of service as a casual employee does not count towards the employee’s period of employment unless:

  • the employment as a casual employee was on a regular and systematic basis; and
  • during the period of service as a casual employee, the employee had an expectation of continuing employment by the employer on a regular and systematic basis.

This provision also needs to be read in conjunction with the general meaning of ‚ ≤service’ and ‚ ≤continuous service’ under s22 of the Act. See: P v DJT Staff Management Services Pty Ltd t/as Daly’s Traffic [2010] FWA 2078.

Unpaid leave/unpaid authorised absence – Under the Fair Work Act, an employee’s absence on unpaid leave or unpaid authorised absence does not count as service, except in certain circumstances. However, FWA has had to determine whether certain unpaid absences from work count as service for the purpose of the minimum period of employment.

Absence on workers compensation

FWA determined that an absence on workers compensation is to be regarded as ‚ ≤paid authorised absence’ under the Fair Work Act (s22), regarding an absence which counts as service for the purpose of determining whether an employee has completed the appropriate minimum period of employment. See: WorkPac Pty Ltd v B [2012] FWAFB 3206.

Absence while receiving income protection payments

FWA determined that the period where the applicant was absent due to illness during which she was not entitled to paid leave must be regarded as a period of unpaid leave or unpaid authorised absence, even though the employee was receiving income protection insurance payments from their superannuation fund.

There was no legal obligation such as under a modern award, enterprise agreement or other employment-related legislation that required income protection insurance payments to be made to the applicant; therefore, the absence is considered unpaid leave or unpaid authorised absence. See: LM v Standard & Poor’s (Australia) Pty Ltd [2012] FWA 9634. Accident Compensation ‚ Æ Victoria

FWA determined in an unfair dismissal matter that an employee absent from work due to injuries sustained in a motor vehicle accident and receiving payments directly from the Transport Accident Commission (Vic) during this absence was deemed to have been on unpaid leave or unpaid authorised absence and, consequently, this period was not counted as service when considering the minimum period of employment. The employer in this case was not making any payments to the employee either directly or indirectly. See: W v Toni and Guy Port Melbourne Pty Ltd [2010] FWA 4540.

Unpaid pre-employment training – A person is not considered to be an employee until an offer by the employer and an acceptance of that offer by the employee has occurred. The period of employment commences when an employment contract exists between the employer and employee, not from when the person commences a pre-employment unpaid training course. For example, FWA determined that a training course advertisement that represented the guarantee of a permanent part-time position if the person successfully completed the training course and obtained a casino employee licence is not an intention that an employment arrangement was automatically created immediately those preconditions to employment were met. Rather it was a guarantee of an offer of employment, provided those preconditions were met. See: C v SkyCity Adelaide Pty Ltd [2010] FWA 9259; [2011] FWAFB 955.

Termination in lieu of notice – An employee who is terminated in lieu of notice within (say) one week of completing the relevant minimum period of employment does not qualify for unfair dismissal.

The employee must have been employed for the minimum period of employment. Provided the payment in lieu of notice is not inconsistent with the applicable industrial instrument or the National Employment Standards (NES), it cannot be deemed the employment continues beyond the time of termination specified by the employer. See: P v Manheim Fowles Pty Ltd [2010] FWA 28.

Overseas employment with same employer – FWA determined there is nothing in the Fair Work Act that would prevent time worked overseas by an employee of an Australian national system employer counting towards service for the purposes of the minimum period of employment.

An applicant who commenced employment with the employer in Pakistan and arrived in Australia on a 457 visa had a total period of employment exceeding the relevant minimum period (6 months) if their employment in Pakistan was included in the period of employment. Consequently, FWA had jurisdiction to hear the unfair dismissal application. See: A v Industries Services Training [2011] FWA 9177.

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