Debra Sherwood v Milestone GI Pty Ltd
[2019] FWC 476
•25 JANUARY 2019
| [2019] FWC 476 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Debra Sherwood
v
Milestone GI Pty Ltd
(U2018/11884)
DEPUTY PRESIDENT CLANCY | MELBOURNE, 25 JANUARY 2019 |
Application for an unfair dismissal remedy – objection that minimum employment period not served – jurisdictional objection dismissed.
[1] This is an edited version of a decision delivered ex tempore and recorded in transcript on 25 January 2019. On 18 November 2018, Mrs Debra Sherwood made an application to the Fair Work Commission (the Commission) for remedy for unfair dismissal under s.394 of the Fair Work Act 2009 (the Act).
[2] Milestone GI Pty Ltd (Milestone) objects to the application on the following grounds:
• The dismissal was a case of genuine redundancy;
• Milestone is a small business employer and it complied with the Small Business Fair Dismissal Code; and
• Mrs Sherwood’s employment does not meet the minimum employment period.
[3] This decision deals with the objection that Mrs Sherwood has not served the minimum employment period.
[4] I heard the parties in relation to Mrs Sherwood’s application for permission to be represented by Mr Nicholas Dircks, a paid agent. Having considered their submissions and s.596 of the Act permission was granted. I also had regard to s.399 of the Act and took into account the views of the parties as to whether I should determine the jurisdictional objection by way of a determinative conference or a hearing and was ultimately satisfied it would be most appropriately dealt with by way of a determinative conference. Mr Zik Cai, Director, appeared for Milestone.
The minimum employment period hearing
Background
[5] Mrs Sherwood commenced working for Australian Consolidated Insurance Services (ACIS) (the then business name for Richard L Matthews Family Trust) on 10 February 2008. Mrs Sherwood worked full-time in the position of Fire Manager at the office in Mount Waverley. She said this position was akin to that of a Senior Account Manager.
[6] On 15 August 2018, Mrs Sherwood was asked by Mr Richard Matthews to attend a meeting with him and various other people, including Mr Cai. Mrs Sherwood was given a letter by Mr Matthews which advised:
“…
As of 3 September 2018 the equity will be transferred to a new owner being Zik Cai and his Team at Milestone GI Pty Ltd. My role will be as Chairman of the organization assisting with the transition and new business relationship management.
Your role will remain the same and Zik will discuss this with you individually. Naturally all entitlements owing to you will be paid out by me. …”
[7] Mrs Sherwood said the business ultimately transferred from Richard L Matthews Family Trust to Milestone on 5 September 2018. She said after the transfer took place, they continued to trade under the name of ACIS and worked out of the same office in Mount Waverley. Mrs Sherwood said the client lists, clients and work all transferred over and the furniture, equipment and obvious business assets also transferred to Milestone. Mr Cai confirmed Mrs Sherwood’s evidence in this regard.
[8] Mrs Sherwood said her long service leave entitlements and personal leave transferred to Milestone. Her accrued, but untaken, annual leave as at 4 September 2018 (5.15 days) was paid to her by ACIS.
[9] On 20 September 2018, Mrs Sherwood commenced a period of leave and returned on 15 October 2018.
[10] On 29 October 2018, Mrs Sherwood received a letter from Mr Cai advising that her position as General Insurance Fire Manager could be declared redundant. The letter advised that a meeting was to take place the following day in order for Mrs Sherwood to raise any matters and the company would then conclude whether a redundancy would proceed.
[11] Mrs Sherwood’s employment was terminated by reason of redundancy on 30 October 2018 and she said she was paid out the balance of her long service leave entitlements and her further accrued, but untaken, annual leave entitlement on 15 November 2018.
[12] Milestone contends Mrs Sherwood was only employed by it from 5 September 2018 to 30 October 2018 and she is therefore not eligible to bring an unfair dismissal application as she has not served the minimum employment period of one year. 1
Is Mrs Sherwood protected from unfair dismissal?
[13] Section 382 of the Act outlines 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] I am satisfied and it is not disputed that, with an annual salary with Milestone of $84,700.00, Mrs Sherwood earned less than the high income threshold. 2 Therefore, the only issue I must determine in order to be satisfied that Mrs Sherwood is protected from unfair dismissal is whether she has completed a period of employment with Milestone of at least the minimum employment period.3
[15] The “minimum period of employment” is defined in s.383 of the Act:
“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.
[16] For the purposes of determining this jurisdictional objection, it is not disputed and I am satisfied that Milestone is a small business employer. Therefore, the minimum employment period in the case of Mrs Sherwood is one year.
[17] A “period of employment” is defined in s.384 of the Act:
“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:
…
(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.”
[18] Accordingly, I must consider whether Mrs Sherwood’s service with ACIS may be attributed to her service with Milestone.
Has there been a transfer of business?
[19] Section 311 of the Act relevantly provides:
“311 When does a transfer of business occur
Meanings of transfer of business, old employer, new employer and transferring work
(1) There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:
(a) the employment of an employee of the old employer has terminated;
(b) within 3 months after the termination, the employee becomes employed by the new employer;
(c) the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;
(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).
Meaning of transferring employee
(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.
Transfer of assets from old employer to new employer
(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:
(a) the old employer or an associated entity of the old employer; and
(b) the new employer or an associated entity of the new employer;
the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):
(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and
(d) that relate to, or are used in connection with, the transferring work.
…”
[20] Mrs Sherwood’s employment with ACIS was terminated on or around 4 September 2018 and she commenced employment with Milestone on 5 September 2018. 4 It is not disputed that the work Mrs Sherwood performed for ACIS was the same or mostly the same as the work she performed for Milestone.5
[21] I must also consider in determining whether a transfer of business has occurred whether there is a connection between ACIS and Milestone as described in any of subsections (3) to (6) of s.311 of the Act. Pursuant to s.311(3), there will be a connection between ACIS and Milestone if, in accordance with an arrangement between them, Milestone owns or has the beneficial use of some or all of the assets (whether tangible or intangible) that ACIS owned or had the beneficial use of and that relate to, or are used in connection with, the transferring work. 6 Milestone acquired the client list and clients of ACIS when the business was sold. Milestone continued to service these clients after it acquired the business. Milestone also had the beneficial use of some furniture and equipment that ACIS owned or had the beneficial use of and that related to, or was used in connection with, the transferring work and operated from the same business premises that ACIS had used. I am satisfied therefore that Milestone has the beneficial use of at least some of the assets ACIS owned or had the beneficial use of them and that they related to or were used in connection to the transferring work.
[22] Consequently, I am satisfied a transfer of business has occurred 7 and that Mrs Sherwood was a transferring employee.8
Has there been a transfer of employment such that Mrs Sherwood’s service with ACIS counts as service with Milestone?
[23] Section 22 of the Act provides:
“22 Meanings of service and continuous service
…
When service with one employer counts as service with another employer
(5) If there is a transfer of employment (see subsection (7)) in relation to a national system employee:
(a) any period of service of the employee with the first employer counts as service of the employee with the second employer; and
(b) the period between the termination of the employment with the first employer and the start of the employment with the second employer does not break the employee’s continuous service with the second employer(taking account of the effect of paragraph (a)), but does not count towards the length of the employee’s continuous service with the second employer.
…
Meaning of transfer of employment etc.
(7) There is a transfer of employment of a national system employee from one national system employer (the first employer) to another national system employer (the second employer) if:
(a) the following conditions are satisfied:
(i) the employee becomes employed by the second employer not more than 3 months after the termination of the employee’s employment with the first employer;
(ii) the first employer and the second employer are associated entities when the employee becomes employed by the second employer; or
(b) the following conditions are satisfied:
(i) the employee is a transferring employee in relation to a transfer of business from the first employer to the second employer;
(ii) the first employer and the second employer are not associated entities when the employee becomes employed by the second employer.
(8) A transfer of employment:
(a) is a transfer of employment between associated entities if paragraph (7)(a) applies; and
(b) is a transfer of employment between non-associated entities if paragraph (7)(b) applies.”
[24] As outlined above at [22], I am satisfied Mrs Sherwood is a transferring employee in relation to a transfer of business from ACIS to Milestone. 9
[25] In its outline of argument, Milestone contends ACIS and Milestone are not associated entities as “Richard Matthews is not related to the Director Zik Cai [and] Richard Matthews does not have a shareholding in the Respondent Milestone GI Pty Ltd.” 10 Mr Cai gave evidence at the determinative conference that ACIS and Milestone are not associated entities and it was not seriously challenged. I am satisfied the businesses are not associated entities under s.50AAA of the Corporations Act 2001 (Cth).
[26] Consequently, I find there has been a transfer of employment pursuant to s.22(7)(b) of the Act. Therefore, as there has been a transfer of employment, pursuant to s.22(5) of the Act Mrs Sherwood’s period of service with ACIS counts as service with Milestone.
Has Mrs Sherwood completed a period of employment with Milestone of at least the minimum employment period?
[27] It is worth restating the relevant provisions of s.384 of the Act:
“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:
…
(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.”
[28] As found above, Mrs Sherwood is a transferring employee in relation to a transfer of business and ACIS and Milestone are not associated entities. Mrs Sherwood’s period of service with ACIS, approximately 10 years and eight months as a full-time employee, does not count towards her period of service with Milestone if Milestone informed her in writing before the new employment started that her period of service with ACIS would not be recognised. I accept Mr Cai wanted there to be what he described as a “clean cut” between the two periods of employment however, he conceded he did not inform Mrs Sherwood in writing before she started employment with Milestone that her service with ACIS would not be recognised. 11 This issue was not ever discussed between them.
[29] Consequently, I am satisfied Mrs Sherwood’s period of service with ACIS counts towards her period of employment with Milestone. Having worked full-time with ACIS for over 10 years and with no evidence of significant excluded periods which would greatly reduce her service during her time with ACIS such as a period of unauthorised absence or unpaid leave, 12 Mrs Sherwood has completed the relevant minimum employment period of at least one year, indeed significantly more.
[30] Milestone’s jurisdictional objection that Mrs Sherwood has not served the minimum employment period is therefore dismissed and the matter will now be remitted to the Unfair Dismissal Case Management Team for further programming.
DEPUTY PRESIDENT
Appearances:
N Dircks for the Applicant.
Z Cai for the Respondent.
Hearing details:
2019.
Melbourne:
January 25.
Printed by authority of the Commonwealth Government Printer
<PR704320>
1 Fair Work Act 2009 (Cth) s 383.
2 Fair Work Act 2009 (Cth) s 382(b)(iii).
3 Fair Work Act 2009 (Cth) s 382(a).
4 Fair Work Act 2009 (Cth) s 311(1)(a), (b).
5 Respondent’s outline of argument: objections, question 2s and Fair Work Act 2009 (Cth) s 311(1)(c).
6 Fair Work Act 2009 (Cth) s 311(3).
7 Fair Work Act 2009 (Cth) s 311(1).
8 Fair Work Act 2009 (Cth) s 311(2).
9 Fair Work Act 2009 (Cth) s 22(7)(b)(i).
10 Respondent’s outline of argument: objections, question 2q.
11 Respondent’s outline of argument: objections, question 2t.
12 Fair Work Act 2009 (Cth) s 22(2).
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