Adam Tudball v Marvarela Pty Ltd t/as Elders Real Estate Cabarita Beach

[2015] FWC 1620

[2015] FWC 1620

FAIR WORK COMMISSION

REASONS FOR DECISION

Fair Work Act 2009
s 394 - Application for unfair dismissal remedy

Adam Tudball
v
Marvarela Pty Ltd t/as Elders Real Estate Cabarita Beach
(U2014/12583)

DEPUTY PRESIDENT SAMS SYDNEY, 18 MARCH 2015

Application for relief from unfair dismissal - three jurisdictional objections - disputed date of dismissal - small business employer - minimum employment period - associated entities - applicant’s claims not accepted - employer was a small business - no minimum employment period - application dismissed.

[1] This decision arises from an application to the Fair Work Commission (the ‘Commission’) for a remedy for unfair dismissal, pursuant to s 394 of the Fair Work Act 2009 (the ‘Act’). Mr Adam Tudball (the ‘applicant’) claims that he was dismissed from his employment with Marvarela Pty Ltd t/as Elders Real Estate Cabarita Beach (the ‘respondent’) effective 5 September 2014, although he claims he left the respondent’s employment on 24 August 2014. The applicant lodged his application on 17 September 2014. The applicant was first employed by the respondent on either 12 or 17 February 2014. The respondent raised the following jurisdictional objections to the application:

• The application was lodged out of time;



• The applicant resigned from his employment with the respondent; and



• The respondent is a Small Business Employer (as defined) and the applicant does not have the minimum employment period of twelve months.

[2] The applicant identified 21 August 2014 as the date on which he ‘could not attend anymore’ and that his actual date of termination was 9 September 2014. The respondent stated that the applicant resigned from his employment on 24 August 2014. The application was filed on 17 September 2014. The Act mandates a 21 day time limit for initiating an application for a remedy for unfair dismissal. If the date of termination is accepted to be either 21 or 24 August 2014, then the application is six or three days out of time, respectively. If the date of 9 September 2014 is accepted as the date on which the dismissal took effect, then the application is within time. The evidence on this point appears to be conflicted. However, in view of my finding that the respondent is a Small Business Employer, it is unnecessary for this conflict to be resolved. On the evidence accepted by both parties, the applicant had less than twelve months employment with the respondent.

[3] In determining this application, the Commission has had regard to the Form F2 Application for an Unfair Dismissal Remedy and the Form F3 Employer’s Response filed on 26 September 2014. On 13 October 2014, the Commission wrote to the respondent’s representative asking her to provide material supporting the objection that the respondent is a Small Business Employer. On 22 October 2014, the respondent provided a statement of Mr Mark Howlett, Director. On 4 November 2014, the Commission wrote to the applicant seeking his response to Mr Howlett’s statement. He did so by email on 5 November 2015. The respondent provided written submissions and a further statement of Mr Howlett on 10 December 2014. The Commission wrote to the applicant again on 20 January 2015. He provided a number of emails on 21 January and 3, 4, 5, 10 and 11 February 2015. Having considered this material, I formed the view that the respondent was a Small Business Employer. Because the applicant had less than the minimum employment period twelve months, I issued an order dismissing the application on 23 February 2015. What follows are my reasons for doing so.

STATUTORY PROVISIONS AND PRINCIPLES

[4] S 382 of the Act sets out when an employee is protected from unfair dismissal. It is expressed as follows:

‘382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.’

[5] The Act sets out the relevant minimum period of employment and the method by which that period of employment is to be calculated in ss 383 and 384 of the Act as follows:

‘383 Meaning of minimum employment period

The minimum employment period is:

(a) if the employer is not a small business employer—6 months ending at the earlier of the following times:

(i) the time when the person is given notice of the dismissal;

(ii) immediately before the dismissal; or

(b) if the employer is a small business employer—one year ending at that time.


384 Period of employment

(1) An employee’s period of employment with an employer at a particular time is the period of continuous service the employee has completed with the employer at that time as an employee.

(2) However:

(a) a period of service as a casual employee does not count towards the employee’s period of employment unless:

(i) the employment as a casual employee was on a regular and systematic basis; and

(ii) during the period of service as a casual employee, the employee had a reasonable expectation of continuing employment by the employer on a regular and systematic basis; and

(b) if:

(i) the employee is a transferring employee in relation to a transfer of business from an old employer to a new employer; and

(ii) the old employer and the new employer are not associated entities when the employee becomes employed by the new employer; and

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

the period of service with the old employer does not count towards the employee’s period of employment with the new employer.’

[6] The definition of Small Business Employer for the above purposes is set out in s 23 of the Act. It is expressed as follows:

‘23 Meaning of small business employer

(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.

(2) For the purpose of calculating the number of employees employed by the employer at a particular time:

(a) subject to paragraph (b), all employees employed by the employer at that time are to be counted; and

(b) a casual employee is not to be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis.

(3) For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.

(4) To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee’s employment, the employees that are to be counted include (subject to paragraph (2)(b)):

(a) the employee who is being dismissed or whose employment is being terminated; and

(b) any other employee of the employer who is also being dismissed or whose employment is also being terminated.’

[7] S 12 of the Act sets out that ‘associated entity’ has the same meaning as that outlined in s 50AAA of the Corporations Act 2001 (Cth). The section is expressed as follows:

‘50AAA  Associated entities

(1)  One entity (the associate) is an associated entity of another entity (the principal) if subsection (2), (3), (4), (5), (6) or (7) is satisfied.

(2)  This subsection is satisfied if the associate and the principal are related bodies corporate.

(3)  This subsection is satisfied if the principal controls the associate.

(4)  This subsection is satisfied if:

(a)  the associate controls the principal; and

(b)  the operations, resources or affairs of the principal are material to the associate.

(5)  This subsection is satisfied if:

(a)  the associate has a qualifying investment (see subsection (8)) in the principal; and

(b)  the associate has significant influence over the principal; and

(c)  the interest is material to the associate.

(6)  This subsection is satisfied if:

(a)  the principal has a qualifying investment (see subsection (8)) in the associate; and

(b)  the principal has significant influence over the associate; and

(c)  the interest is material to the principal.

(7)  This subsection is satisfied if:

(a)  an entity (the third entity) controls both the principal and the associate; and

(b)  the operations, resources or affairs of the principal and the associate are both material to the third entity.

(8)  For the purposes of this section, one entity (the first entity) has a qualifying investment in another entity (the second entity) if the first entity:

(a)  has an asset that is an investment in the second entity; or

(b)  has an asset that is the beneficial interest in an investment in the second entity and has control over that asset.’

CONSIDERATION

[8] In written evidence, Mr Howlett deposed that he is the director of the respondent, a franchisee of Elders Real Estate, which employed the applicant between 17 February and 25 August 2014. The respondent employed eight persons on 25 August 2014 and six persons (not including the applicant) on 9 September 2014. Mr Howlett acknowledged that he was a director of Reclar Pty Ltd, which acted as trustee for the Howlett Discretionary Trust, which operates a boarding house business. This business did not employ any persons, on either 25 August or 9 September 2014.

[9] In response to this point, the applicant emailed the Commission in the following terms:

‘On top of me objecting to the 6 month rule used by marverela pty ltd but also the small business claim. Elders Cabarita in [sic] a franchise business attached to a large franchise group, proving Mark Howlett has a lot more support than a typical small business and pays franchise fees for staff training days etc. Whilst operating individually these guys work as a unit, (franchises ) and award nights confirm this...’

[10] Mr Howlett stated that the respondent maintained control over its management and operations. Elders Limited (the franchisor) provided branding to the respondent. Training and product were provided to the respondent at cost. Monthly franchise fees were paid to Elders Limited and it received a percentage of all sales of the respondent. Mr Howlett annexed to his statement a letter from the respondent’s accountant, Ms Julie West. Ms West advised:

‘that Marvarela Pty ltd is not an associate of Elders Limited or any other Elders franchise. Elders Limited is a franchisor and Marvarela Pty Ltd is a franchisee.

Based on the definitions of an associated entity under section 50AAA of the Corporations Act, in my professional opinion, only the following can be determined to be an associated entity to Marvarela Pty Ltd;

● Mark Howlett
● Vanessa Howlett
● M.C Howlett & V.L Howlett
● Howmarv Pty Ltd
● Reclar Pty Ltd
● The Howlett Discretionary Trust
● Howlett Cabarita Property Trust
● M & V Howlett Superannuation Fund

When taking into account the above associated entities the total employees of the group of entities since 1 July 2013 has not exceeded 9 employees.’

[11] In a further statement, Mr Howlett claimed that the applicant had resigned his employment by text message on Monday 25 August 2014. The text said:

‘Hi Mark, been wrestling with this for the last week. I’ve decided I am not coming back and handing in my resignation. I will be in touch in the next couple of days.’

[12] Mr Howlett said that after he had called the applicant at approximately 9:00am and requested that he put his resignation in writing, he received the following text message:

‘Hi Mark.
Please accept this as written notice for exiting of employment citing health reasons and monetary issues.
Thankyou [sic] for your employment.
Warm regards
Adam Tudball.’

[13] In written submissions for the respondent, Ms S Fantini from the Real Estate Employers’ Federation directed the Commission’s attention to s 50AAA of the Corporations Act 2001, which sets out the definition of ‘related entities’ as may be relevant to s 23(3) of the Act. This was distinguished from the definition of ‘franchise’ in the Fair Work Act 2009 and the Corporations Act 2001. It was put that the fact that the respondent was a franchisee of Elders Limited should not lead to a finding that they were associated entities for the purposes of the Act; See: Webster v Toni and Guy Port Melbourne Pty Ltd t/as Toni and Guy Port Melbourne[2010] FWA 4540; and Ellick v Investment Rainbow Pty Ltd T/A Michel’s Patisserie[2012] FWA 3680.

[14] The Commission provided this material to the applicant for comment. In response, he sent a number of emails to the Commission between 20 January and 10 February 2015. These emails made a number of assertions as to the respondent’s legal responsibilities in relation to the regulation of the real estate industry generally. This material is irrelevant to the issue before the Commission. The applicant did not deny that the respondent and its associated entities employed less than 15 people; rather, he maintained that persons involved in the provision of Elders print material, franchise sellers and training staff, involved with Elders should be taken into account when considering the respondent’s status as a small business employer:

‘To slip them into the small business categorie [sic] would be criminal against others who honestly utilise those laws.’

[15] In an email dated 5 February 2015, the applicant said:

‘I believe at this point I now await for the director general to deal with the franchise laws and Corporations Act laws that are unfair to me ( burden of laws), that Mark Howlett will continually uphold against me with such laws and of course winning to an extent. I believe these laws are possibly unfair themselves and have contributed to my claim and have been very tiresome to understand as a self representative. I believe it to be the governments responsibility to ammend/examine [sic] the franchise and corporations act laws the respondent as referred to after hearing my experience, allowing large companies to do whatever they feel is right and be supported by laws again I feel unfair in this instance and potentially across the industry again now awaiting the director generals decision.’

[16] In a further email dated 11 February 2015, the applicant submitted:

‘I therefor [sic] state that the minimum employment period should only apply if you have not been unfairly treated in the workplace, under paid or shown the door greatly based on some very serious wrongs.’

[17] Having considered the above material, I confirm my finding that the respondent is a Small Business Employer, as defined. The applicant’s submissions appear to be that the Commission should accept one of the following propositions:

1. That the Commission should count the employees of Elders Limited, being the franchisor of the respondent’s real estate business, in determining whether the respondent is a Small Business Employer, as defined in s 23 of the Act; or

2. That a finding that the respondent is a Small Business Employer, as defined, would be unjust.

[18] In relation to the first of the applicant’s submission, I note that he has presented no evidence to demonstrate that Elders Limited, as franchisor of the respondent’s real estate business, is an associated entity, within any of the criteria set out in s 50AAA of the Corporations Act 2001. I accept the submissions of Ms Fantini that the fact the respondent is a franchisee of Elders Limited should not lead to a finding that the respondent and Elders Limited are to be considered as associated entities for the purposes of the Act. I accept the evidence of Mr Howlett and find that, having taken into account all of the respondent’s associated entities, the respondent is a Small Business Employer, as defined. The second of the applicant’s submission is misconceived and incorrectly interprets the provisions of the Act. In addition, as will be seen from the applicant’s emails above, he appears to have taken his grievance with the respondent elsewhere (the ‘Director-General’).

CONCLUSION

[19] Having considered the material before the Commission, I am satisfied that the respondent is a Small Business Employer, within the meaning of s 23 of the Act. As the applicant had not completed the twelve months minimum employment period with the respondent, he is therefore not a person protected from unfair dismissal, within the meaning of s 382(a) of the Act. Moreover, on its face, the applicant appears to have willingly resigned his employment. He would therefore not meet the test of having been dismissed at the employer’s initiative; See s 394(1). The application for an unfair dismissal remedy must be dismissed. I confirm my order of 23 February 2015.

DEPUTY PRESIDENT

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