Bernardo Rivera v Geora Ltd T/A Geora

[2020] FWC 4396

[2020] FWC 4396

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Bernardo Rivera
v
Geora Ltd T/A Geora
(U2020/1931)

DEPUTY PRESIDENT BOYCE SYDNEY, 9 NOVEMBER 2020

Application for an unfair dismissal remedy — minimum period of employment — whether employer was a small business — whether employer was an associated entity of another for the purposes of calculating number of employees — where one entity is found to not be an associated entity of another — where employer found to be a small business — application dismissed.

Introduction

[1] On 20 February 2020, Mr Bernardo Rivera (Applicant) filed a Form F2 with the Fair Work Commission (Commission), being an application for an unfair dismissal remedy (Application). By way of his Application, the Applicant claims that:

(a) he was dismissed from his employment with A.C.N. 630 167 618 Ltd; Full Profile Pty Ltd; AgriDigital; Geora (which the Applicant asserts are all “related entities” entities under the Corporations Act 2001 (Corporations Act));

(b) his dismissal took effect on on 30 January 2020; and

(c) his dismissal was “unfair” within the meaning of Part 3-2 of the Fair Work Act 2009 (Act).

[2] On 3 March 2020, Geora Ltd T/A Geora (Respondent or Geora) filed a Form F4 with the Commission (Response). By way of that Response, the Respondent claims that:

(a) the Respondent was actually the Applicant’s employer; and

(b) the Respondent sought to raise two jurisdictional objections to the Application:

i. the Applicant was not “dismissed” within the meaning of s.386 of the Act (Dismissal Objection); and/or in the alternative

ii. the Applicant did not meet the “minimum employment period” within the meaning of s.383 of the Act (Minimum Employment Period Objection).

[3] Despite raising two jurisdictional objections, only the Minimum Employment Period Objection really needs to be determined in the first instance. Indeed, if the Respondent is held to be a small business employer, the Applicant would not have completed the minimum employment period and would therefore not qualify to make any application for an unfair dismissal remedy. If that is the case, then the Dismissal Objection is of no event.

[4] On 19 May 2020, I held a hearing (by telephone) regarding the substantive application. Ms Amanda Both (Unfair Dismissals Direct) appeared with permission for the Applicant. Ms Bridie Ohlsson (Chief Executive Officer of the Respondent) appeared for the Respondent. I note that Ms Ohlsson was assisted in the preparation of her submissions by Ms Dianne Banks (Solicitor, Gilbert + Tobin), and that such assistance falls within the broad interpretation of “representation” within the meaning of s.596 of the Act. 1 I granted both parties permission to be legally represented generally in the proceedings, having regard to the matters required to be considered under s.596 of the Act, notably that the Objections to the Application go to matters of jurisdiction (which are inherently complex),2 and that the assistance of legal representation would assist the Commission (from an efficiency perspective) in the proper conduct of the proceedings.

[5] I granted leave for the Application to be amended to change the name of the Respondent to the Application from “A.C.N. 630 167 618 Ltd; Full Profile Pty Ltd; AgriDigital; Geora” to “Geora Ltd T/A Geora”.

[6] Having considered the evidence and submissions of the parties, I have determined that the Commission does not have jurisdiction to consider and determine the Application. My reasons for this decision follow.

Background facts

[7] The following facts are not in contest:

(a) On 20 May 2019, the Applicant commenced employment with the Respondent.

(b) On 30 January 2020, the Applicant was given notice of termination for the reason of poor performance.

(c) In accordance with the Applicant’s “Employment Agreement” with the Respondent dated 20 May 2019, the Applicant was directed to take “garden[ing] leave” during the four weeks’ notice period.

(d) On 27 February 2020, the Applicant’s employment ended with the Respondent (Termination Date).

[8] However, the following facts are in contest:

(a) As to the number of persons employed by the Respondent as at the Termination Date:

(i) the Respondent says it only employed six employees; and

(ii) the Applicant says that the Respondent employed more than 15 persons, as the Respondent was an “associated entity” of AgriDigital.

Relevant Law — Minimum Employment Period Objection

[9] As per s.382(a) of the Act, a person is protected from unfair dismissal at the time of dismissal if, at that time, the person is an employee who has completed a period of employment with his or her employer of at least the “minimum employment period”.

[10] Section 383 of the Act defines “minimum employment period” as follows:

“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”.

[11] Relevantly, s.23 of the Act defines a “small business employer” as follows:

“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”.

[12] An “associated entity” has the same meaning given by s.50AAA of the Corporations Act, 3 which is defined as follows:

“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”.

[13] For the purposes of an “associated entity”, ss.12 and 64 of the Corporations Act relevantly define an “entity” as a natural person, a body corporate (other than an exempt public authority), a partnership or a trust, and in the case of a trust, a reference to the trustee of the trust.

[14] “Control” is defined in s.50AA of the Corporations Act as when one entity has the capacity to influence decisions about the financial and operating policies of the second entity.

Issues to be determined — Minimum Employment Period Objection

[15] The Respondent cannot be taken to be a “small business employer” if the number of employees engaged by AgriDigital are required to be accounted for.

[16] The Respondent submits that AgriDigital and the Respondent are not “associated entities” within the meaning of the Corporations Act, as none of subs-ss.(2), (3), (4), (5), (6) or (7) in s.50AAA of the Corporations Act are satisfied.

[17] In support of that position, the Respondent tendered the following witness statements:

(a) Witness Statement of Ms Ohlsson dated 4 May 2020;

(b) Witness Statement of Ms Emma Watson (Non-Executive Director of the Respondent) dated 4 May 2020;

(c) Second Witness Statement Ms Ohlsson dated 25 May 2020; and

(d) Second Witness Statement Ms Emma Watson dated 25 May 2020.

[18] While the Respondent’s witness statements describe an idiosyncratic corporate relationship between AgriDigital and the Respondent (with industry-specific jargon often left undefined, unexplained, and otherwise being of little assistance), I nonetheless draw the following relevant facts from the evidence:

(a) Ms Ohlsson is an Executive Director and Chief Executive Officer of the Respondent. Prior to being engaged by the Respondent, Ms Ohlsson was employed by AgriDigital in various roles. In her capacity as CEO for the Respondent, Ms Ohlsson has responsibility for managing Geora’s strategic initiatives, business plan, budget, providing support to the Board of Directors, and leading all business operations (including finance and administration, human resources, legal, risk and compliance).

(b) Ms Watson is a Non-Executive Director of the Respondent, and the current Chief Executive Officer of AgriDigital. In her capacity as a Non-Executive Director of the Respondent, Ms Watson undertakes a variety of activities that might best be described as being consistent with her statutory duties as a director. In the performance of those duties, Ms Watson says that she is not subject to any direction from AgriDigital (and there is no capacity for AgriDigital to do so).

(c) The Respondent was incorporated in or around November 2018. At that time, the Board of AgriDigital decided to “open source” the blockchain technology it had developed for the benefit of the agricultural industry, and to encourage the trial and eventual adoption of blockchain solutions by industry participants, as well as to extend the reach of the technology beyond the “grains industry” so that other commodities and industries could gain access to the technology. It was decided to establish a company limited by guarantee to which AgriDigital’s blockchain intellectual property would be transferred. That company was the Respondent. The Respondent has a membership-based model and there are no shareholders. The Respondent was established as an independent technology platform in order to benefit the entire agricultural industry. Through the corporate structure of being a company limited by guarantee, it aims to provide the technology to facilitate this collaboration, which includes open dialogues and projects with a number of other start-up business including, inter alia, AgriDigital.

(d) The management and operations of the Respondent and AgriDigital are separate. The technology developed by the Respondent and by AgriDigital are separate technologies. Ms Ohlsson is responsible for the employment policies, operational policies, accounting, industry memberships, customer relations, sales processes, revenue models, engagement with lawyers and accountants, and all other general operational and financial policies of the Respondent. AgriDigital has no involvement in these decisions. Ms Ohlsson does not receive instruction from AgriDigital or any of its employees as to the financial or operational policies of the Respondent.

(e) Ms Weston does not have an operational role in the Respondent. Ms Weston has never been employed or otherwise paid by the Respondent. In her role as Director, Ms Weston assists with setting the strategic direction of the Respondent and providing market insights in her personal capacity as a so-called “industry leader”. The Respondent’s team leverages Ms Weston’s network to access potential customers, industry partners, speaking and pitching opportunities. Ms Weston does not have the ability to control the operations or finances of Geora.

(f) The decision to approach Ms Weston was made by Ms Ohlsson and Mr George Samman (Director of the Respondent), and was not made because of any formal or informal connection between the Respondent and AgriDigital. The Respondent is under no obligation to appoint Ms Weston or any other person nominated by AgriDigital to the Board of the Respondent.

(g) On or around 18 December 2019, the Respondent took a loan from AgriDigital for a total amount of $356,000 for the purpose of building technology (Loan). The Loan does not provide AgriDigital with any control over the operation or finances of the Respondent. The loan is repayable in full plus five percent interest. The Loan Agreement was negotiated by Ms Ohlsson on behalf of the Respondent, and their appointed lawyers from Gilbert + Tobin, and AgriDigital and their appointed lawyers of King & Wood Mallesons.

[19] The Applicant filed one witness statement, being his own statement, which is undated. However, the Applicant provides no relevant evidence that goes to the question as to whether the Respondent is an associated entity of AgriDigital. Instead, the Applicant’s evidence consists of speculation, statements of opinion, or bare assertions — the thrust of which tends more toward submissions than evidence. The Applicant’s evidence is most unhelpful in this regard, and it does not bear repeating. Finally, I note that the Applicant forwent the opportunity to cross-examine the Respondent’s witnesses. On that basis, I have no reason to doubt the gravamen of the Respondent’s evidence.

[20] Having considered the parties’ evidence and submissions, I make the following findings:

(a) The Respondent and AgriDigital are not related bodies corporate.

(b) The Respondent is not controlled by AgriDigital. Both entities are financially and operationally independent. AgriDigital does not have the capacity to determine financial and/or operational policies or outcomes within the Respondent. AgriDigital does not have the capacity to appoint someone to the role of Director within the Respondent. The financial and operational systems of both the Respondent and AgriDigital are entirely separate. That Ms Weston is a common Director of both the Respondent and AgriDigital is not to the point. Ms Weston does not exercise any requisite control over the Respondent. Further, Ms Weston’s capacity to influence the Respondent is tempered by the fact that there are other Directors on the Board of the Respondent, as well as the fact that Ms Weston acts in a Non-Executive capacity. These circumstances are distinct from cases where “control” has been established. 4

(c) AgriDigital is not controlled by the Respondent.

(d) The Respondent does not have a qualifying investment in AgriDigital.

(e) AgriDigital does not have a qualifying investment in the Respondent, or significant influence over the Respondent that is material to AgriDigital. The Loan does not require or permit any financial or operational influence or control by AgriDigital over the Respondent’s business.

(f) As already stated, Ms Weston, as a third party, does not control the Respondent. As already established, Ms Weston does not have the ability to control the operations or finances of the Respondent.

Conclusion

[21] The Respondent and AgriDigital are at arm’s length from one another. The latter birthed the former, with a vision that the Respondent might operate and develop technology in a niche industry. The question is whether AgriDigital and the Respondent are “associated entities” within the statutory definition. For reasons provided above, the answer to that question, on the evidence before me, must be no.

[22] The Respondent is a Small Business within the meaning of the Act. The Applicant had not completed 12 months of service with the Respondent before he was dismissed (even assuming, but for the Dismissal Objection, he was so “dismissed”). The Applicant is therefore, even on his best case, not a person protected from unfair dismissal (under Part 3-2 of the Act). The Respondent’s Minimum Employment Period Objection is therefore upheld. Accordingly, the Applicant’s application for an unfair dismissal remedy must be dismissed. An order to that effect will be published in due course.

DEPUTY PRESIDENT

Appearances:

Ms Amanda Both (Unfair Dismissals Direct) appeared for the Applicant.

Ms Bridie Ohlsson (Chief Executive Officer of the Respondent) appeared for the Respondent.

Printed by authority of the Commonwealth Government Printer

<PR721979>

 1   Fitzgerald v Woolworths Limited[2017] FWCFB 2797 at [45].

 2   CEPU v UGL Resources Pty Limited (Project Aurora)[2012] FWA 2966 at [23].

 3   Fair Work Act 2009, s.12 (definition of “associated entity”).

 4   d.f. cases where “control” has been established: Pretorius v Gardens of Italy Pty Ltd[2016] FWC 2503; Budden v Finke Enterprises Pty Ltd ATF M&L Carlson Family Trust [2015] FWC 8675; Salgras v Fingal Glen Pty Ltd atf the Adelaide Riviera Trust[2011] FWA 1401; MacInnnes v Gladstone CC Pty Ltd[2016] FWC 8838; Sutton v Solar and Batteries Direct Pty Ltd [2019] FWC 1560.