Don Kuruppuarchchi v Wicker IP Royalties Pty Ltd T/A Wicker Research Centre
[2018] FWC 2272
•21 APRIL 2018
| [2018] FWC 2272 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Don Kuruppuarchchi
v
Wicker IP Royalties Pty Ltd T/A Wicker Research Centre
(U2017/11188)
COMMISSIONER PLATT | ADELAIDE, 21 APRIL 2018 |
Application for relief from unfair dismissal – jurisdictional objection –– minimum employment period of 6 months met –– jurisdictional objections dismissed.
Summary
[1] On 19 October 2017, Mr Kuruppuarchchi 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 Wicker IP Royalties Pty Ltd T/A Wicker Research Centre (Wicker) (ABN 77 606 716 474) on 2 October 2017.
[2] On 8 November 2017, Ms Stanway from Employsure Pty Ltd, on behalf of Wicker, lodged a form F3 Employer Response and contended that Wicker engaged five employees, was a small business employer, that Mr Kuruppuarchchi’s employment was terminated for serious misconduct and that it complied with the Small Business Fair Dismissal Code.
[3] The application was the subject of a conciliation conference on 9 November 2017 but did not resolve.
[4] On 27 November 2017, directions were issued for a hearing on the jurisdictional objection and the merits. These directions were varied on 15 December 2017.
[5] On 11 December 2017, Ms Stanway from Employsure Pty Ltd advised she ceased to act for Wicker.
[6] On 18 December 2017, Wicker provided its statement and an outline of argument. In that material Wicker contended that Mr Kuruppuarchchi was engaged as a contractor in 2016 and was not engaged as an employee by Sen Johve and Dunstan Pty Ltd until 3 January 2017, when he commenced in the role of Head of IT.
[7] The effect of the material filed by Wicker indicates that it contends that Mr Kuruppuarchchi has not completed the minimum employment period applicable to a small business (12 months) required by ss.382, 383 of the Act.
[8] On 12 January 2018, the Commission advised the parties that the previous directions would be cancelled and the matter would be listed for the determination of the jurisdictional objections being the minimum employment period issue and high income threshold. Further directions were issued.
[9] On 7 March 2018, the matter was allocated to my Chambers.
[10] On 9 March 2018, directions were issued in relation to the filing of any additional material in relation to the jurisdictional objection that Mr Kuruppuarchchi had not met the minimum employment period and the matter was listed for jurisdictional hearing on 12 April 2018.
[11] The material filed on behalf of Wicker is summarised as follows:
• Mr Kuruppuarchchi signed a letter of offer from Wicker in 2016. However, he could not meet the requirements of that employment contract. Mr Kuruppuarchchi was the holder of a student visa and would breach the terms of that Visa if he worked for Wicker. Mr Kuruppuarchchi entered into a contractor arrangement with Wicker and was paid as an individual contractor.
• The employment contract dated 6 January 2016 refers to Mr Kuruppuarchchi having been ‘selected to work for Wicker IP Royalties Pty Ltd’, as ‘Head of IT’ and that the position was ‘permanent’.
• On 3 January 2017, Mr Kuruppuarchchi was employed by Sen Johve and Dunstan Pty Ltd (ABN 89 603 532 396).
• Mr Kuruppuarchchi was dismissed on 2 October 2017 due to his conduct and work performance. A copy of the termination letter was provided.1 The last paragraph of that letter states “Please note that your employment contract signed with Wicker IP Royalties Pty Ltd on the 6th of January 2016 and the subsidiary Marketing company contract signed on the 4th January 2017 from Sen Johve and Dunstan Pty Ltd have both been discontinued on the 2nd October 2017.”
- Payments made by Wicker to Mr Kuruppuarchchi were based on the performance of project work as invoiced.
- Wicker submitted a document titled ‘Timesheet details’ which recorded payments made to Mr Kuruppuarchchi for the period 9 August 2016 to 10 August 2017.2 The time sheet records the number of hours worked by Mr Kuruppuarchchi. The hours are totalled and there is a notion of the annual part time hours of 960 (20 hours for 48 weeks) and the document notes that there was a shortfall of 198.43 hours ‘owed’ by Mr Kuruppuarchchi (including work done as an independent contractor).
• A contract of employment between Mr Kuruppuarchchi and Sen Johve & Dunstan Pty Ltd executed on 4 January 2017 was also provided.3
[12] The material filed on behalf of Mr Kuruppuarchchi is summarised as follows:
• Mr Kuruppuarchchi was employed by Wicker Research Centre on 6 January 2016 and dismissed on 2 October 2017. A copy of a written contract of employment dated 6 January 2016 and signed on that day was provided.4
• Mr Kuruppuarchchi was employed for a period of 90 weeks, during which time he was absent for 14 weeks.
• Mr Kuruppuarchchi was employed for a period of more than one year and has met the minimum employment period requirements.
• The jurisdictional objection should be dismissed.
[13] A hearing to deal with the jurisdictional objections was conducted by way of telephone conference on 12 April 2018. Mr Kuruppuarchchi was represented by Mr Patrick Mullally from Workclaims Australia. Permission was granted pursuant to s.596(2) of the Act. Ms Aariya Charisma Wickham and Ms Sylvia Sen represented Wicker. The hearing was conducted in the form of a determinative conference.
[14] Mr Kuruppuarchchi, Ms Wickham and Ms Sen were sworn prior to giving evidence.
[15] The parties confirmed that there was no dispute as to the date of the dismissal, that Wicker was a small business within the meaning of s.23 of the Act, the applicable minimum employment period (MEP) pursuant to s.383 of the Act is 12 months and that Wicker and Sen Johve and Dunstan Pty Ltd were related entities within the meaning of s.50AA of the Corporations Act 2001.
[16] The key issues to be determined is the period of Mr Kuruppuarchchi’s continuous service as defined in s.384 and s.22 of the Act.
[17] At the commencement of the hearing the following documents were tendered:
• Applicant Outline of Argument and Objection on Merits (8 January 2018) – Exhibit A1
• Applicant’s Outline of Argument on Objection being that the MEP has not been served (31 January 2018) – Exhibit A2
• Applicant’s witness statement (27 December 2017) – Exhibit A3
• Applicant’s witness statement (31 January 2018) – Exhibit A4
• Applicant’s Outline of Argument on Objection being that the MEP has not been served (22 March 2018) – Exhibit A5
• Termination of Contract letter dated 2 October 2017 – Exhibit R1
• Letter titled Head of IT Wicker Royalties Pty Ltd dated 6 January 2016 – Exhibit R2
• Employment Contract between Sen Johve & Dunstan Pty Ltd and Don Kuruppuarchchi dated 3 January 2017 – Exhibit R3
• Respondent’s Outline of Argument (22 January 2018) including attachment titled ‘timesheet details’ – Exhibit R4
• Document titled Response to Unfair Dismissal – Wicker IP Royalties Pty Ltd – Exhibit R5
• Bundle of documents including draft wages 2015/16, PAYG Payment summary statement for year ending 30 June 2016, Individual PAYG statements for the year ending 2016 for Ms Senevirante, Wickham, Koonara Mudyanselage– Collectively Exhibit R65
- Witness Statement by Ms Wickham – Exhibit R7
- Unnamed 2015-16 Tax Return – Exhibit R8
- Group of Pay Slips for Mr Don Kuruppuarchchi for the period 6 July 2016-20 June 2017 – Exhibit R9
• Document titled Employee Remuneration – Exhibit R10
• PAYG Summary for Mr Don Kuruppuarchchi for year ended 30 June 2017 – Exhibit R10A
• Document titled ‘Payroll Activity Details 1 July 2016-30 June 2017 – Exhibit R11
• Screenshot of Gmail email dated 4 August re Timetable – Exhibit R11A
• Screenshot of Gmail email dated 18 September re Hourly Pay rates – Exhibit R12
• Document titled ‘Re: Duties and responsibilities’ dated 1 September – Exhibit R13
• Email titled ‘Fwd: Twinklebotts Hosting’ dated 25 October 2017 – Exhibit R14
[18] Ms Wickham’s evidence was that Mr Kuruppuarchchi was initially employed as an employee (as per Exhibit R2) and in the first week of his employment it was agreed that he would be engaged as a contractor. Ms Wickham contended that Mr Kuruppuarchchi’s work and timelines were subject to her direction and that he was not entitled to contract out this work. Ms Wickham contended that Mr Kuruppuarchchi was not subsequently engaged as an employee until January 2017.
[19] After reviewing the payslips (Exhibit R9) and the notations concerning the deduction of PAYG tax, annual leave accruals and superannuation contributions, Ms Wickham then contended that Mr Kuruppuarchchi had been engaged on a trial basis from 14 September 2016. Ms Wickham then conceded that the trial engagement was as an employee.
[20] Ms Wickham then accepted that Mr Kuruppuarchchi had been employed for a period in excess of 12 months, but contended that Mr Kuruppuarchchi was absent from the workplace without authorisation from 19 February 2017 to 30 April 2017 and 18 December 2016 to 25 December 2016.
[21] Ms Wickham was unable to satisfactorily explain why the termination letter6 referred to the termination of both the 6 January 2016 and the 3 January 2017 contracts of employment.
[22] Mr Kuruppuarchchi contends that he was engaged as an employee on 6 January 2016 and was never engaged as a contractor. Mr Kuruppuarchchi states that he accrued annual leave during his employ and his absences were authorised annual leave and coincided with his wife (who appears to reside in Sri Lanka) having a baby. Mr Kuruppuarchchi also contends he performed work for Wicker from Sri Lanka and was paid for same.
[23] Ms Sen then contended that Mr Kuruppuarchchi never applied for annual leave, and that the company had a written policy that required such applications to be made in writing. Mr Kuruppuarchchi disputed this contention. Despite being given an opportunity to do so, Ms Sen was unable to provide a copy of any such policy and merely referred to clauses 6 and 18 contained in the contract of employment dated 3 January 2017,7 neither of which provided any foundation for the contention that annual leave must be provided in writing. I note that this contract provides for 10 days annual leave per annum which appears inconsistent with the National Employment Standards. Ms Sen also suggested that the company had evidence of contractor payments made to Mr Kuruppuarchchi. When invited to refer the Commission to such documents, Ms Sen referred to the payslips contained in Exhibit R9 and then almost immediately conceded that Ms Wickham had already conceded that these pay slips referred to a period when Mr Kuruppuarchchi was employed. These two events reflect poorly on Ms Sen’s credibility.
Relevant Law
[24] Section 382 of the Act provides that a person is protected from unfair dismissal if they have completed a period of employment of at least the minimum employment period:
“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.”
[25] Section 383 of the Act sets out 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.”
[26] Section 384 of the Act sets out an employee’s period of employment:
“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.”
[27] Section 23 of the Act sets out the definition for small business employer:
“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.”
“22 Meanings of service and continuous service
General meaning
(1) A period of service by a national system employee with his or her national system employer is a period during which the employee is employed by the employer, but does not include any period (an excluded period ) that does not count as service because of subsection (2).
(2) The following periods do not count as service:
(a) any period of unauthorised absence;
(b) any period of unpaid leave or unpaid authorised absence, other than:
(i) a period of absence under Division 8 of Part 2-2 (which deals with community service leave); or
(ii) a period of stand down under Part 3-5, under an enterprise agreement that applies to the employee, or under the employee's contract of employment; or
(iii) a period of leave or absence of a kind prescribed by the regulations;
(c) any other period of a kind prescribed by the regulations.
(3) An excluded period does not break a national system employee's continuous service with his or her national system employer, but does not count towards the length of the employee's continuous service.
(3A) Regulations made for the purposes of paragraph (2)(c) may prescribe different kinds of periods for the purposes of different provisions of this Act (other than provisions to which subsection (4) applies). If they do so, subsection (3) applies accordingly.
Meaning for Divisions 4 and 5, and Subdivision A of Division 11, of Part 2-2
(4) For the purposes of Divisions 4 and 5, and Subdivision A of Division 11, of Part 2-2:
(a) a period of service by a national system employee with his or her national system employer is a period during which the employee is employed by the employer, but does not include:
(i) any period of unauthorised absence; or
(ii) any other period of a kind prescribed by the regulations; and
(b) a period referred to in subparagraph (a)(i) or (ii) does not break a national system employee's continuous service with his or her national system employer, but does not count towards the length of the employee's continuous service; and
(c) subsections (1), (2) and (3) do not apply.
Note: Divisions 4 and 5, and Subdivision A of Division 11, of Part 2-2 deal, respectively, with requests for flexible working arrangements, parental leave and related entitlements, and notice of termination or payment in lieu of notice.
(4A) Regulations made for the purposes of subparagraph (4)(a)(ii) may prescribe different kinds of periods for the purposes of different provisions to which subsection (4) applies. If they do so, paragraph (4)(b) applies accordingly.
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.
Note: This subsection does not apply to a transfer of employment between non-associated entities, for the purpose of Division 6 of Part 2-2 (which deals with annual leave) or Subdivision B of Division 11 of Part 2-2 (which deals with redundancy pay), if the second employer decides not to recognise the employee's service with the first employer for the purpose of that Division or Subdivision (see subsections 91(1) and 122(1)).
(6) If the national system employee has already had the benefit of an entitlement the amount of which was calculated by reference to a period of service with the first employer, subsection (5) does not result in that period of service with the first employer being counted again when calculating the employee's entitlements of that kind as an employee of the second employer.
Note: For example:
(a) the accrued paid annual leave to which the employee is entitled as an employee of the second employer does not include any period of paid annual leave that the employee has already taken as an employee of the first employer; and
(b) if an employee receives notice of termination or payment in lieu of notice in relation to a period of service with the first employer, that period of service is not counted again in calculating the amount of notice of termination, or payment in lieu, to which the employee is entitled as an employee of 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.
Note: Paragraph (a) applies whether or not there is a transfer of business from the first employer to 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.”
Was Mr Kurupuarchchi an independent contractor or an employee?
[28] Pursuant to s.382 of the Act, a person is only protected from unfair dismissal if that person is an employee.
[29] Wicker originally contended that Mr Kuruppuarchchi was an independent contractor until 3 January 2017 and Mr Kuruppuarchchi asserts that all time he was an employee.
[30] As was stated by an AIRC Full Bench in Abdalla v Viewdaze Pty Ltd t/as Malta Travel:8
“the task of distinguishing between employment and independent contractor is one of characterisation turning upon matters of substance (including substantive contractual rights and obligations) rather than form: labels applied by the parties cannot alter the substantive character of the relationship.”
[31] The only documentary evidence as to the period between 6 January 2016 and 6 September 2016 is Exhibit R2, which Wicker accepts was initially offered and accepted as a contract of employment. Wickers’ contention that Mr Kuruppuarchchi was engaged as a contractor shortly after January 2016 is contested. Wicker originally contended that Mr Kuruppuarchchi was engaged as a contractor until January 2017 but during the hearing (possibly in light of the overwhelming evidence contained in Exhibit R7) conceded that Mr Kuruppuarchchi was employed from 7 September 2016.
[32] Given this concession, it is not in dispute that Mr Kuruppuarchchi was employed by Wicker (or an associated entity) between 7 September 2016 and 2 October 2017.
[33] Wicker was unable to provide any documentary evidence in support of the contractor relationship (e.g. invoices, commercial contract) that it alleges prior to 7 September 2016. Wicker submitted a Tax Return9 purportedly made by Mr Kuruppuarchchi. The return does not contain Mr Kuruppuarchchi’s name. I am not aware of the status of this document, it may have been a draft or not lodged with the ATO. I accept that it does not contain a record of payment of wages by Wicker to Mr Kuruppuarchchi. That is not conclusive however that Mr Kuruppuarchchi was not paid, only that this document does not record any payment.
[34] Wicker also submitted a number of PAYG returns for the year ended 30 June 201610 which do not reflect any payments made to Mr Kuruppuarchchi. That information does not allow me to conclude that that Mr Kuruppuarchchi was not paid, only that this document does not record any payment.
[35] Whilst there are a number of indicia set out in case law which may assist with determining whether a person is an independent contractor or an employee, I have considered and adopted the comments of Mummery J in Hall (Inspector of Taxes) v Lorimer that consideration of the indicia:11
“...is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.”
[36] Ms Wickham’s evidence over the level of control and direction and Mr Kuruppuarchchi’s inability to delegate his tasks are indicators of an employment relationship.
[37] Taking into account all of the information before me, including the witness evidence, I am not persuaded that Mr Kuruppuarchchi was engaged as a contractor between January 2016 and 6 September 2017 and find that his employment commenced on 6 January 2016 and continued until the date of termination.
Did Mr Kuruppuarchchi service meet the minimum employment period?
[38] The onus lies on Wicker to establish that Mr Kuruppuarchchi’s service did not meet the minimum employment period.
[39] Wicker contends that Mr Kuruppuarchchi was absent without leave for a period of approximately seven weeks and that I should not regard that period as service pursuant to s.22(2)(a) of the Act. In support of this position, Wicker contends that no written application for annual leave was made. As required by its written annual leave policy. No written policy was submitted and the contract of employment does not require a written application for annual leave.
[40] I note that Mr Kuruppuarchchi was able to perform his work remotely and that he was paid for some periods when he was not located in Australia. I prefer the evidence of Mr Kuruppuarchchi that he was granted annual leave and accordingly no deductions as to his length of service should be made.
[41] I also note that as a result of my finding as to the commencement of the employment period, the deductions Wicker proposed that I make from Mr Kuruppuarchchi service would not reduce Mr Kuruppuarchchi’s continuous service below the required period of 12 months.
[42] I find that Mr Kuruppuarchchi’s service as an employee meets the minimum employment period required by s.383 of the Act and that Mr Kuruppuarchchi is a person protected from unfair dismissal pursuant to s.382 of the Act.
Conclusion
[43] As a result of my findings, there is no jurisdictional barrier for Mr Kuruppuarchchi. An Order12 to this effect will be issued and the matter will be allocated to a member of the Commission and listed for hearing of the merits.
COMMISSIONER
Appearances:
Mr P Mullally of Workclaims Australia on behalf of the Applicant.
Ms A Wickham and Ms S Sen on behalf of the Respondent.
Hearing details:
2018.
Adelaide:
12 April.
Printed by authority of the Commonwealth Government Printer
<PR602172>
1 Exhibit R1
2 Exhibit R2
3 Exhibit R3
4 Exhibit A1
5 Note: A letter written to the Commission by Michael Watson which was attached was not received as it contained opinion evidence and the author was not present to give evidence
6 Exhibit R1
7 Exhibit R3
8 PR927971
9 Exhibit R8
10 Exhibit 6
11 [1992] 1 WLR 939 at 944, endorsed in Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (1997) 37 AT 528 which was further endorsed in Roy Morgan Research Centre Pty Ltd v Commissioner of Taxation (2010) 184 FCR 448
12 PR602173
0
2
0