Carolin Hemingway v Think Commercial Projects Pty Ltd ATF Think Commercial Projects Trust T/A Think Commercial Projects

[2016] FWC 4885

[2016] FWC 4885

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Carolin Hemingway
v
Think Commercial Projects Pty Ltd ATF Think Commercial Projects Trust T/A Think Commercial Projects
(U2016/1556)

DEPUTY PRESIDENT KOVACIC MELBOURNE, 20 JULY 2016

Application for relief from unfair dismissal - jurisdictional objections –small business employer - minimum employment period – termination or resignation – jurisdictional objection regarding minimum employment period upheld – application dismissed.

[1] On 4 April 2016 Ms Carolin Hemingway (the Applicant) filed an application under s.394 of the Fair Work Act 2009 (the Act) alleging that the termination of her employment by Think Commercial Projects Pty Ltd as the Trustee for Think Commercial Projects Trust T/A Think Commercial Projects (the Respondent) on 16 March 2016 was unfair.

[2] In its Form F3 – Employer Response to Unfair Dismissal Application the Respondent raised a jurisdictional objection, contending that Ms Hemingway was not dismissed but that she resigned.

[3] The Fair Work Commission (the Commission) issued Directions on 17 May 2016, with those Directions amended on 18 May 2016.

[4] The application was heard on 17 June 2016. At the hearing, Ms Hemingway appeared on her own behalf, while Mr Camillo Longo, the Respondent’s Director, appeared for the Respondent. Also at the hearing, the Respondent raised a further jurisdictional objection, contending that, as it was a small business, Ms Hemingway was not protected from unfair dismissal because she had not completed the required minimum employment period.

[5] For the reasons set out below I have found that the Respondent is a small business employer for the purposes of the Act, that Ms Hemingway had not completed the minimum employment period required by s.382 of the Act, that as a result Ms Hemingway was not protected from unfair dismissal and that her application was therefore incompetent. Accordingly, Ms Hemingway’s application is dismissed.

Background

[6] Ms Hemingway was employed by the Respondent as a sales representative and commenced her employment on 14 September 2015.

[7] On 2 March 2016 Ms Hemingway met with Mr Longo and her manager, Mr Joe Campisi, to discuss Ms Hemingway’s sales performance. The outcome of that meeting was that Ms Hemingway’s wage was reduced from $60,000 per annum to $40,000 per annum. Ms Hemingway’s performance was to be reviewed in a month and if it had improved her wage would be increased to $60,000 per annum. The Respondent contended that the wage reduction was agreed to by Ms Hemingway. Ms Hemingway disputed this. With regard to the reduction in Ms Hemingway’s annual wage, Ms Suzana Longo of the Respondent sent Ms Hemingway an email at 4.58pm on 2 March 21016 which stated:

“Dear Carolin,

Just a follow up email based on your discussion with Camillo today. As agreed your annual salary has been changed to $40,000.00 + Superannuation + a car allowance of $576.94 fortnightly. This is effective immediately and for an indefinite period.

A review will be conducted in April.” 1

[8] Ms Hemingway responded at 5.07pm on 2 March 2016 as follows:

“Hi there,

- sorry Susanna – I thought that it was a temporary arrangement for the next four weeks with a review– not Annual pay rate – an amount which would be “repaid” later once life resumes to normal with the addition of pumping sales.

I understand that Camillo is giving me an opportunity to prove myself– and I am determined to not let him down, however this is most unusual …” 2 (Formatting as per original)

[9] Ms Longo emailed Ms Hemingway again at 3.54pm on 3 March 2016 asking “Please respond and let me know you agree to my email below. I want to process your pay tomorrow” 3, with Ms Hemingway responding at 4.26pm that day stating “Yes, Suzanna”4.

[10] On 15 March 2016, Ms Hemingway sent an email to Mr Longo which read as follows:

“Dear Camillo

I resign from Think, today 15th March 2016, and hereby give 3 weeks’ notice – which I am sure comes as no great surprise.

I anticipate receiving all the holiday pay, expenses, super, commission and any other entitlements as per my signed contract, including making amends to the short paid pay from the last pay period.

Please note that your sudden decision to reduce my income the other week is in no way acceptable to me nor accepted. Given this, I feel that although I have invested in Think Commercial Projects, it is no longer the company for me.

…

I am going to greener pastures – I am happy to handover to whoever you nominate and explain the ins and outs of the outstanding quotes.

In my new job in commercial furniture, I will have the capability to come across fitout work – which I would be happy to pass on to Think – once the contractual commitments owed by Think to myself have been fulfilled.” 5

[11] The Respondent elected to pay Ms Hemingway one weeks’ notice, despite her contract of employment stating that:

“Think Commercial Projects or you may terminate this contract of employment by giving 3 weeks’ notice of termination.” 6

[12] The Respondent did not require Ms Hemingway to work out the notice period and on 16 March 2016 asked her to return her office keys, mobile phone and laptop.

[13] As previously mentioned, Ms Hemingway lodged her unfair application on 4 April 2016.

The Applicant’s case

[14] Ms Hemingway submitted that the Respondent had forced her to resign by:

• moving her out of an office into the general office area in mid February 2016 where she was unable to make client calls because of the noise;



• underpaying her consistently, including not paying her 3 weeks’ notice or her correct holiday pay, car allowance and leaving pay; and



• taking away her keys, mobile phone and internet.

[15] Ms Hemingway also submitted, among other things, that the Respondent employed over 15 people.

[16] At the hearing, Ms Hemingway reiterated that she had been constructively dismissed by the Respondent, adding that she felt she had no option but to resign as a result of the reduction in her wage. When asked by the Commission what the words “I am going to greener pastures” in her resignation email meant, Ms Hemingway responded that she had secured another job right away. Further, Ms Hemingway submitted that there were two sides to the Respondent’s business, one side dealing with construction and the other with interiors. Ms Hemingway added that both businesses operated from the same premises, though she was not sure of the companies’ “set up”. However, Ms Hemingway contended that together both businesses employed over 15 people.

[17] With regard to the Payroll Summary [Activity] (see below) provided by the Respondent on 21 June 2016 in response to a request from the Commission at the hearing, Ms Hemingway advised on 27 June 2016 that “I would like to make the point that this is only half the payroll – whre [sic] is Camillo and Suzanna Longo. You really need to include think construction.”

The Respondent’s case

[18] The Respondent submitted that Ms Hemingway was not dismissed but that she resigned on 15 March 2016 and that it had seven employees (including Mr Longo).

[19] At the hearing, the Respondent submitted that as it employed less than 15 persons that Ms Hemingway had not completed the required minimum employment period. On this issue, the Respondent was asked to provide to the Commission by close of business on Monday, 20 June 2016 a copy of its payroll summary for the pay period in which 15 March 2016 fell. What the Respondent provided was a Payroll Activity [Summary] for the period 1 July 2015 to 15 March 2016 which identified five employees. The list did not include Mr Longo or Ms Longo who, if included, increase the number of employees to seven. Ms Hemingway’s comments were sought on the payroll summary provided by the Respondent.

[20] As to Ms Hemingway’s contention that there were two sides to the Respondent’s business, the Respondent confirmed that it shared premises with Think Commercial Construction Pty Ltd which had four employees. However, the Respondent contended that while Mr Longo was a Director of Think Commercial Construction Pty Ltd he did not have any role in the day to day running of the business. The Respondent further submitted that Think Commercial Construction Pty Ltd was a separate entity which operated its own payroll and own set of accounts and did not share any assets or liabilities with the Respondent.

The statutory framework

[21] The Commission exercises its powers in relation to an application for an unfair dismissal remedy pursuant to Part 3-2 of the Act. The relevant provisions from Part 3-2 of the Act are set out below together with the definition of the term “associated entity” set out in s.12 of the Act and s.23 which deals with the meaning of small business employer.

“12 The Dictionary

In this Act:
…

associated entity has the meaning given by section 50AAA of the Corporations Act 2001.

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.

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.

Note: High income threshold indexed to $138,900 from 1 July 2016

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.”

Consideration of the issues

[22] The threshold question to be resolved in this matter is whether or not the Respondent is a small business employer for the purposes of the Act. From the Payroll Activity [Summary] for the Respondent, adding in Mr Longo and Ms Longo indicates that the Respondent had at most seven employees at the time Ms Hemingway’s employment ceased. However, the Commission also needs to consider whether Think Commercial Construction Pty Ltd is an associated entity of the Respondent.

[23] Section 12 of the Act defines an associated entity by reference to s.50AAA of the Corporations Act 2001 (the Corporations Act). Sections 50 (which deals with related bodies corporate) and 50AAA of the Corporations Act provide as follows:

“50 Related bodies corporate

Where a body corporate is:

(a) a holding company of another body corporate;
(b) a subsidiary of another body corporate; or
(c) a subsidiary of a holding company of another body corporate;

the first-mentioned body and the other body are related to each other.

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 investmentin 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.”

[24] The Commission obtained from the Australian Securities and Investments Commission (ASIC) Current Company Extracts for the Respondent and Think Commercial Construction Pty Ltd. Those extracts show that:

• Mr Longo is the sole shareholder and Director of the Respondent;



• while Mr Longo is one of two Directors of Think Commercial Construction Pty Ltd, he owns no shares in that entity;



• Ms Suzana Longo owns 50 per cent of the shares in Think Commercial Construction Pty Ltd; and



• neither entity has an interest in the other entity.

[25] Drawing on the abovementioned ASIC company extracts, none of the requirements in subsections 50AAA(2), (3), (4), (5), (6) or (7) are satisfied. This does not point to the respondent and Think Commercial Construction Pty Ltd being associated entities for the purposes of the Act. Accordingly, no regard needs to be had to the number of persons employed by Think Commercial Construction Pty Ltd.

[26] To summarise, the above analysis supports a finding that the Respondent employed seven persons at the time Ms Hemingway’s employment ceased and was therefore a small business employer as defined in s.23 of the Act and that Think Commercial Construction Pty Ltd is not an associated entity of the Respondent.

Was the Applicant protected from unfair dismissal?

[27] Section 382 of the Act provides that an employee is protected from unfair dismissal if at the time of their dismissal they had completed at least the minimum employment period. Section 383 of the Act provides that the minimum employment period for an employee employed by a small business employer is one year.

[28] As previously mentioned, Ms Hemingway commenced employment with the Respondent on 14 September 2015 and ceased employment on 16 March 2016. This is a period of just over six months, which is less than the one year minimum employment period specified in s.383(b) of the Act in respect of small business employer such as the Respondent.

[29] As Ms Hemingway had not completed the required one year minimum employment period prior to her employment ceasing, she is not protected from unfair dismissal under the Act. Accordingly, her application is incompetent and will be dismissed.

Other issues

[30] In view of the above finding, I do not need to determine whether Ms Hemingway was constructively dismissed.

Conclusion

[31] For all the above reasons I find that:

(i) the Respondent is a small business employer for the purposes of the Act;
(ii) Ms Hemingway had not served the minimum employment period required by s.382 of the Act;
(iii) as a result, Ms Hemingway was not protected from unfair dismissal; and
(iv) Ms Hemingway’s application is therefore incompetent and is dismissed.

[32] An order dismissing Ms Hemingway’s application will be issued in conjunction with this decision.

Appearances:

C. Hemingway on her own behalf.

C. Longo for the Respondent.

Hearing details:

2016.

Melbourne:

June 17.

 1   Respondent’s Document List at Attachment 3

 2   Ibid at Attachment 1

 3   Ibid

 4   Ibid

 5   Ibid at Attachment 4

 6   Attachment to Statement regarding Forced Resignation/Constructive Dismissal by Carolin Hemingway

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