Darcy Constantine v Minda Incorporated T/A Minda
[2019] FWC 3929
•11 JUNE 2019
| [2019] FWC 3929 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Darcy Constantine
v
Minda Incorporated T/A Minda
(U2019/1890)
COMMISSIONER PLATT | ADELAIDE, 11 JUNE 2019 |
Application for an unfair dismissal remedy – jurisdictional objection – minimum employment period – contractor or employee – held not an employee for 6 months prior to dismissal –applicant not protected from unfair dismissal – application dismissed.
Summary
[1] On 21 February 2019 Mr Darcy Constantine lodged an application pursuant to s.394 of the Fair Work Act 2009 (the Act) seeking a remedy for an alleged unfair dismissal by his former employer Minda Incorporated T/A Minda (Minda) which took effect on 5 February 2019.
[2] On 5 December 2018, SA Group Enterprises (a wholly owned subsidiary of Minda) filed a Form F3 Employer Response which raised a jurisdictional objection on the basis that Mr Constantine had not completed the minimum employment period (MEP).
[3] The matter did not resolve at Conciliation and was allocated to my Chambers on 27 March 2019.
[4] Directions for the filing of material and the date of the Hearing were issued on 2 April 2019. The Hearing was conducted on 6 and 7 May 2019.
[5] Mr Wright represented Mr Constantine and Ms Hii represented Minda. Permission was granted under s.596(2) of the Act.
[6] The matters that were not in dispute are summarised as follows:
• SA Group Enterprises (SAGE) is an associated entity of Minda.
• Minda employs about 600 persons.
• SAGE was tasked to open a new staff/public café (Café Inc.) on the Minda North Brighton site which replaced the previous staff cafeteria (Isabel’s Café).
• In September 2017 SAGE engaged Mr Constantine as a contractor on the Café Inc Project. Mr Constantine submitted invoices for payment based on an hourly rate.
• On 6 August 2019 Mr Constantine commenced employment with SAGE. A written contract of employment was executed.
• On 5 February 2019 (prior to the completion of the rostered hours of work for the day) SAGE advised Mr Constantine orally and in writing that he was dismissed and that his notice (12 weeks) would be paid in lieu.
• The applicable MEP is six months.
• If the MEP is met then Mr Constantine will be protected from unfair dismissal.
[7] The issues in dispute in this matter are as follows:
• Mr Constantine contends by attending work on the 5th February 2019 he completed the MEP. Minda contends that Mr Constantine’s MEP concluded “immediately before” the 6 February 2019 and that Mr Constantine was not employed at that time.
• In the alternative, Mr Constantine contends that between May and August 2018, his relationship with Minda changed from a contractor to that of an employee and that if this change occurred prior to 6 August 2018 he will have completed the MEP.
[8] Witness statements in support of the Applicant were received from Mr Constantine, Mr Marcello Paola (Barista) 1 and Mr Craig Shearer (Trainee Barista).2 Mr Constantine gave evidence.
[9] Witness statements in support of the Respondent were received from Ms Michelle Gheorghiu (Executive Infrastructure Director) 3, Mr Jamie Higgins (General Manager Commercial Enterprises)4, Ms Lorraine Johnston (Executive Manager People and Culture)5, Ms Tracy-Biddiss-Scott (former Commercial Manager HR Operations and WHS)6, and Mr Marcus Gehrig (Executive Manager Strategic Marketing and Fundraising)7.
[10] The Respondent’s CEO at the time, Ms Cathy Miller, was not called by either party to give evidence, despite my invitation to issue a summons. Other than my being advised that Ms Miller no longer works for Minda, Ms Miller’s absence is unexplained. It appears her evidence may have assisted my determination of this matter. Despite being invited to do by the Applicant, the circumstances are such that I decline to draw an adverse inference.
[11] The key issues to be decided in this matter are as follows:
• Was Mr Constantine’s agreed period of employment sufficient to meet the MEP?
• If not, was Mr Constantine’s engagement properly characterised as an employee prior to 6 August 2018, such that the MEP was met? Noting that SAGE and Minda are related employers and if Mr Constantine was an employee with SAGE, s.311 of the Act would apply such that Mr Constantine would be a transferring employee and any previous service would transfer to Minda in accordance with s.22(5) of the Act.
Was Mr Constantine’s agreed period of employment sufficient to meet the MEP?
[12] The parties provided detailed written and oral submissions on this topic.
[13] Section 382 provides when a person is protected from unfair dismissal:
“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.”
[14] Section 383 defines the minimum employment period:
“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.”
[15] Section 23 defines a “small business employer”. It is not in dispute that Minda is not a small business employer.
[16] Section 2G of the Acts Interpretation Act 1901 (Cth) (the AIA) defines a month.
[17] When reading the AIA in conjunction with the s.383 of the Act, Mr Constantine’s MEP (if it commenced on 6 August 2018) would have ended immediately before 6 February 2019. This approach is consistent with the Full Bench’s decision in Richard Wilkinson v Skippers Aviation Pty Ltd. 8
[18] I find that Mr Constantine’s employment for the period between 6 August 2018 and 5 February 2019 does not of itself meet the six month period required by the MEP.
Was Mr Constantine engaged as an employee prior to 6 August 2018 such that the MEP was completed?
[19] Ms Gheorghiu was responsible for Infrastructure at Minda, and this included the construction component of the Café Inc project. Ms Gheorghiu leveraged Mr Constantine’s knowledge of the hospitality sector for the design and fit out of the Café. 9
[20] Mr Constantine contends that from about May 2018 (or a later date) he ceased to be a contractor and became an employee. Unlike the events of 6 August 2018, no written contract of employment was executed, nor is there any independent evidence of the wish of the parties to change the characterisation of the contractor relationship.
[21] Therefore, any change in the relationship must be inferred from the nature of the engagement.
[22] Mr Constantine accepts that he was a consultant (and not an employee) between September 2017 and May 2018. 10 Mr Constantine issued invoices in the name of DIN Pty Ltd a company he owns with his wife. No GST was charged on advice from his accountant.11
[23] Mr Constantine was engaged by Ms Miller (which whom he had a previous partnership in a café) in order to use his expertise to help with the design and fit out of Café Inc. as no one at Minda had that level of expertise. 12
[24] Mr Constantine contended he reported to Ms Miller until her departure in September 2018. 13
[25] Mr Constantine contended that his work varied from 14 May 2018 in that the fit out was more or less complete and the Café was being prepared to open. 14 Whilst there was a delay due to issues with the unavailability of gas for the kitchen, Mr Constantine started to source stock and suppliers and prioritise jobs that needed to be done.15 Mr Constantine continued to be self-managed at this time.16
[26] On 11 May 2018, the builder completed their works and commissioning commenced, including the installation of services and equipment, testing and fine tuning of the equipment. 17 Once the Café was ready to operate, Ms Gheorghiu’s oversight ceased and the Café was under the oversight of Operations. This occurred in about August 2018.18 Once operational the Café came under the SAGE entity. Ms Gheorghiu was aware that Mr Constantine provided some consultancy services to SAGE.19
[27] Mr Constantine contends that he became an employee on 14 May 2018 when his remuneration arrangement changed to a fixed amount per week and he was asked to operationalise Café Inc. 20 At this time he was given the alarm and safe access codes and would open the Café every morning.21 After the staff commenced in June 2018 they reported to him.22
[28] In May 2018 Mr Constantine was also setup as a “Manager” in Minda’s internal HR systems, but initially accepted Minda’s explanation that this was required so that lower level staff could be employed. 23 Later in his evidence Mr Constantine contended that his allocation as Manager indicated he was an employee.24
[29] Mr Constantine was required to obtain a DCSI clearance, however that was required by both contractors and employees.
[30] In June 2018 Ms Miller asked Mr Constantine to produce a Liquor license. 25 Café Inc commenced operating on 12 or 13 June 2018; this was termed the soft opening.26 The hard opening occurred on 1 October 2018 when the liquor license had been obtained.27
[31] Mr Constantine initially contended he did all of the tasks in relation to hiring interviewing. After further examination it appears that he assisted with short listing applications, Minda arranged the interviews and he attended the interviews. 28 It appears that Minda completed the contract of employment for the persons to whom employment was offered.
[32] In terms of managing staff, Mr Constantine would be assisted by Ms Tracy Biddiss-Scott as required, particularly if the matter was performance related. 29
[33] During this period Mr Constantine continued to operate his other businesses 30 including, DIN Pty Ltd (in conjunction with his wife), which invoiced Minda/SAGE for services provided by Mr Constantine and he also operated Juree Coffee in conjunction with Mr Horenell.
[34] Mr Constantine continued to use his Juree Coffee email address to communicate, provided his own mobile phone and was responsible for provision of a vehicle and associated running costs. 31 From 6 August 2018 SAGE started to reimburse Mr Constantine for such expenses.32
[35] Mr Constantine was not responsible for the budget for Café’ Inc until November 2018. 33
[36] Mr Constantine could not recall giving advice that Café Inc could be run by a “Head Chef”. 34
[37] Café Inc was operationalised in late August/September 2018. 35
[38] Mr Paola and Mr Shearer (who worked in the Café) provided statements that attested to the fact that they believed Mr Constantine was the Manager of the Café. These two witnesses were not required to be cross-examined.
[39] Ms Biddiss-Scott advised that from 6 August 2018 Mr Constantine became responsible and accountable for the operation of Café Inc including budgets and staff. He also had access to supporting corporate systems. Prior to that time, Mr Constantine did not have responsibility for labour costs, performance movement, staff inductions or training. 36
[40] Ms Johnson gave evidence that if Mr Constantine was an employee that she would have been required to prepare the necessary documentation including the employment contract. Ms Johnson was aware that Mr Constantine had initially been engaged as a consultant and her subsequent conversations with the CEO (Ms Cathy Miller) did not indicate that anything had changed with regard to Mr Constantine’s engagement. 37 Ms Johnston was never asked to prepare an employment contract for Mr Constantine.38 Ms Johnston observed that Mr Constantine interacted directly with the CEO.39
[41] Ms Johnston believed that Mr Constantine had no set hours of work and operated a business, a coffee business and a cafe. Ms Johnston accepted it was possible that those operations may have been a single business. 40 Ms Johnston did not observe Mr Constantine wearing a uniform.41 Ms Johnston advised that Mr Constantine did not have any authority (as a consultant) to bind the organisation.42 Ms Johnston said that Mr Constantine would have had a written delegation of authority when he became an employee which would have allow him to (amongst other thing) hire and fire employees and purchase goods and services on behalf of the business.43 Ms Johnston contended that Mr Constantine’s duties as Café Manager were significantly different to his previous duties as a consultant.44 The position description for Café Manager was developed ahead of time and signed off as it would be needed at some point in time regardless as to who was appointed.45
[42] Mr Higgins had three conversations with Mr Constantine as to whether he was going to come and work for Minda in about June – August 2018. Mr Higgins understood that Mr Constantine was not interested in managing Café Inc as he had his own businesses to operate. 46 Mr Higgins gave evidence that after the Café had opened on 13 June 2018 Mr Constantine was still a consultant.47 Mr Higgins rejected the contention that Mr Constantine was employed prior to August 2018.
[43] Mr Higgins said that all Minda/SAGE employees have a Minda or SAGE email address and that these addresses were used to email payslips. 48
[44] Mr Higgins gave evidence that Mr Constantine referred to Minda/SAGE in the third person and not as he would have if he was an employee. For example, Mr Constantine would say, “you need a chef”, “you need another Barista”, “you need someone to work on a Saturday” it wasn’t “we” or “I”. This led Mr Higgins to believe that Mr Constantine was not an employee prior to 6 August 2018. 49
[45] Mr Gehrig gave evidence that Mr Constantine was engaged as a specialist consultant to bring the Café Inc to fruition. 50
[46] Mr Gehrig advised that the uniforms where provided to Café Inc personnel sometime in between the soft launch on 13 June 2018 and hard launch on 1 October 2018. 51
Credit
[47] I recognise that in light of Ms Miller not being called, some portions of the evidence provided in the statements can be accurately characterised as hearsay. I have placed little weight on the truth of hearsay statements, other than the possibility that the statements were made.
[48] Ms Biddiss-Scott and Ms Gheorghiu were impressive witnesses.
[49] Mr Constantine was not an impressive witness. On a number of occasions he appeared to determine not to directly answer questions put to him. 52 In some areas of critical importance his recollection was poor. It appeared to me that that Mr Constantine has reconstructed the events in a manner to put his argument in the best light. The same cannot be said of the witnesses called by Minda. In my view they have given an objective account of what occurred. I accept the evidence of Ms Biddiss-Scott, Mr Higgins, Mr Gehrig and Ms Gheorghiu where it differs with that of Mr Constantine.
Applicable Law
[50] Unfortunately, there is no concise definition of what is “employment”. The case law instead requires that the decision maker conduct a holistic analysis of the indicia.
[51] Whilst there is no exhaustive list of indicia, in the case of Abdalla v Viewdaze 53 the AIRC identified a non-comprehensive list of questions (indicia) to be considered:
• Whether the putative employer exercises, or has the right to exercise, control over the manner in which work is performed, place of work, hours of work and the like [degree of control];
• Whether the worker performs work for others (or has a genuine and practical entitlement to do so);
• Whether the worker has a separate place of work and/or advertises his or her services to the world at large;
• Whether the worker provides and maintains significant tools or equipment [provision and maintenance of equipment or resources];
• Whether the work can be delegated or subcontracted [delegation of work by contractor or exclusivity of performance];
• Whether the putative employer has the right to suspend or dismiss the person engaged;
• Whether the putative employer presents the worker to the world at large as an emanation of the business;
• Whether income tax is deducted from remuneration paid to the worker [deduction of income tax];
• Whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks [mode of remuneration];
• Whether the worker is provided with paid holidays or sick leave [hours of work and entitlements to leave];
• Whether the work involves a profession, trade or distinct calling on the part of the person engaged;
• Whether the worker creates goodwill or saleable assets in the course of his or her work; and
• Whether the worker spends a significant portion of his remuneration on business expenses.
[52] In the case of Stevens v Brodribb Sawmilling 54 Mason J specifically noted that the existence of control is only one of the relevant indicia:
“the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this Court has been to regard it merely as one of a number of indicia which must be considered in the determination of that question ...Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee
…
Furthermore, control is not now regarded as the only relevant factor. Rather it is the totality of the relationship (emphasis added) between the parties which must be considered.”
[53] In the more recent case of Hollis v Vabu Pty Ltd 55, the High Court confirmed the approach as established in Stevens:
“It should be added that the relationship between the parties, for the purposes of this litigation, is to be found not merely from these contractual terms. The system which was operated thereunder and the work practices imposed by Vabu go to establishing "the totality of the relationship" between the parties; it is this which is to be considered.”
[54] In Trakas v BPL Adelaide Pty Limited 56, Deputy President Anderson observed that the principles governing an employment relationship are well established and are drawn from contractual principles, including the existence of offer, acceptance, valuable consideration and intention to create legal relations.57
[55] It is well established that the Commission will look to the real substance of a relationship, by reference to the indicia, to determine if an employment relationship exists. 58 This is the approach I have adopted.
Consideration
[56] The determination of the correct characterisation of the basis upon which Mr Constantine was engaged in the period from 11 May to 6 August 2018 (including any lesser continuous period immediately prior to 6 August 2018) requires the examination of the evidence provided.
[57] There is no dispute that Mr Constantine was a consultant and not an employee in the period up to 11 May 2018. It is useful to summarise the characteristics of that engagement.
[58] During this period Mr Constantine was:
• From approximately September 2017 contracted to provide support (as a consultant) to Ms Gheorghiu in the planning, design and construction phases of the Café’ Inc Project as the Project Team did not have expertise in hospitality.
• The topics he advised on varied as the Café Inc Project traversed through the various stages.
• Self-managed and subject to minimal direction other than from the CEO.
• Not responsible for budgets – these were the responsibility of Ms Gheorghiu.
• Invoiced Minda for his work from DIN Pty Ltd a business he operated jointly with his wife. The invoices were issued monthly and based on an hourly rate of $120.00 with no guarantee of hours and varied between $800.00 – $1,900.00.
• Provided his own vehicle and mobile phone and email address.
• Was able to (and did) continue to operate separate businesses.
[59] Post 6 August 2018 there is no dispute that Mr Constantine was an employee. The characteristics of this engagement are summarised as follows:
• Mr Constantine had a written contract of employment.
• He was responsible and accountable for the operation of Café Inc including budgets and the direction and management of Café Inc employees.
• He was reimbursed for mobile phone usage and the required equipment to perform his role.
• He continued to operate separate businesses.
• He wore a uniform.
[60] I make the following observations about the intervening period (May – 6 August 2018):
• Mr Constantine continued (via DIN Pty Ltd) to invoice for his services, although from 28 May 2018 the invoices reflected a ‘Contract Consultancy Period’ weekly rate of $1500.00 (with no reference to hours worked). Invoices for the period 14 May – 24 June 2018 was made out to Minda. Invoices for the period 9 July – 5 August 2018 were made out to SAGE.
• Additional invoices were sent seeking payment for purchases made in respect of Café Inc. 59
• It appears that informal discussions about Mr Constantine coming on as an employee had been held but that Mr Constantine advised he did not intend to change his current status as a consultant. 60
• Mr Constantine had substantial input on who was employed but did not have the authority to hire and fire.
• Mr Constantine was provided with an access key and a safe code and wore a uniform when Café Inc opened.
• Mr Constantine continued to provide his own vehicle and mobile phone and email address.
• Mr Constantine continued to be self-managed.
• Mr Constantine was not responsible for budgets.
• Mr Constantine was able to operate his outside businesses.
• No written contract of employment was entered into.
• On 16 May 2018 Mr Constantine obtained a Child Related Employment Screening (which is required regardless of employment status).
• Mr Constantine held a “Responsible Person” license.
[61] There is no evidence of any express intention to engage Mr Constantine as an employee prior to 6 August 2018.
[62] Whilst I accept that Mr Constantine’s role changed throughout the Café Inc Project this is consistent with the progression through the various stages. The fact that Mr Constantine continued to invoice Minda/SAGE from his company is a strong indicator that there was no employment relationship during this period. This practice continued until the commencement of the agreed employment relationship on 6 August 2018.
[63] The contractual arrangement is not such that it appears to be a sham designed to avoid obligations of an employment relationship. Mr Constantine appears to have been compensated at a level significantly higher that any applicable award.
[64] Prior to 6 August 2018 Mr Constantine was responsible for his costs in providing the consultancy services. Post 6 August 2018 these costs were reimbursed by SAGE (i.e. mobile phone expenses).
[65] Whilst Mr Constantine had significant input on the operation of Café Inc (commensurate with his experience), it does not appear that he became accountable for the operation of Café Inc until 6 August 2018.
[66] The fact that Mr Constantine was required to direct employees from the soft opening of the Café and wear a uniform at that time is not determinative in this matter. Nor is the requirement to obtain a Child Related screening or a Responsible Person license.
[67] From the evidence it appears that there was an expectation that a person would be required to be employed to manage the café at some point. The drafting of a Position Description is consistent with that intention. It appears that early on Mr Constantine was of the view that a Head Chef would be able to manage the Café. For some reason the parties appear to have abandoned this approach and a decision was made to appoint Mr Constantine as an employee from 6 August 2018. Some reasons for this decision were postulated – I make no finding in this regard.
[68] Having considered the real substance of the relationship against the range of factors used by the Commission in determining the characterisation of the relationship, I do not believe that Mr Constantine was an employee prior to 6 August 2018.
[69] Accordingly I must find that Mr Constantine’s service is not sufficient to meet the requirements of the MEP.
Conclusion
[70] I find that Mr Constantine is not protected from unfair dismissal and as a result this application must be dismissed.
[71] An Order 61 reflecting this Decision will be issued.
COMMISSIONER
Appearances:
A Wright (of Counsel) on behalf of the Applicant.
M Hii on behalf of the Respondent.
Hearing details:
2019.
Adelaide.
6 & 7 May.
Printed by authority of the Commonwealth Government Printer
<PR709096>
1 Exhibit A2.
2 Exhibit A3.
3 Exhibit R5.
4 Exhibit R2 (Statement), Exhibit R3 (Reply Statement).
5 Exhibit R1.
6 Exhibit R6 (Statement), Exhibit R7 (Reply Statement).
7 Exhibit R4.
8 [2001] AIRC 410.
9 PN1114.
10 PN390.
11 PN390-401.
12 PN404-409.
13 PN602.
14 PN425-437.
15 PN438-439.
16 PN440-448.
17 PN1127.
18 PN1128-1130.
19 PN1176.
20 PN627.
21 PN629.
22 PN634.
23 PN463-469.
24 See exchange PN479-485.
25 PN522.
26 PN527.
27 PN534.
28 PN556-560.
29 PN598.
30 PN564.
31 PN581-592.
32 PN594.
33 PN597-599.
34 PN617.
35 PN675.
36 PN1249.
37 PN255-270.
38 PN269.
39 PN271.
40 PN282.
41 PN289.
42 PN293.
43 PN293-300.
44 PN316.
45 PN324-335.
46 PN824.
47 PN896.
48 PN887-889.
49 PN930.
50 PN1019.
51 PN1052.
52 For example see PN484-485PN688-691.
53 (2003) 122 IR 215, 229 – 231.
54 (1986) 160 CLR 16, 24 (Stevens).
55 (2001) 207 CLR 21, 33.
56 [2018] FWC 1530.
57 Re Advanced Australian Workplace Solutions Pty Ltd Print S0253 (AIRCFB, 25 October 1999).
58 On call Interpreters and Translators Agency Pty Ltd v Federal Commissioner of Taxation (No 3) (2011) 206 IR 252 at [89].
59 For example, invoices to SAGE dated 11, 13 and 25 June, and 9, 16, 21, 29 July 2018.
60 See the statement of Mr Higgins, Exhibit R2, paragraph 8.
61 PR709097.
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