Dr Margaret Bakker v Nick Xenophon & Co Lawyers
[2012] FWA 4982
•12 JUNE 2012
Note: An appeal pursuant to s.604 (C2012/4409) was lodged against this decision - refer to Full Bench decision dated 3 October 2012 [[2012] FWAFB 8518] for result of appeal.
[2012] FWA 4982 |
|
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Dr Margaret Bakker
v
Nick Xenophon & Co Lawyers
(U2012/233)
DEPUTY PRESIDENT BARTEL | ADELAIDE, 12 JUNE 2012 |
Jurisdiction - Minimum employment period - Costs application
[1] On 25 January 2012, Dr Margaret Bakker (the applicant) was dismissed from her employment with Nick Xenophon & Co Lawyers (the respondent). She filed an application for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (the Act) on 6 February 2012.
[2] This decision deals with a jurisdictional objection raised by the respondent that the applicant had not completed the minimum employment period as at the date of dismissal. The respondent has also sought an order for costs pursuant to s.611 of the Act.
[3] Dr Bakker is a legal practitioner and was self represented at the hearing. The respondent was represented by Ms G Walker, of counsel.
[4] The issue between the parties is whether the respondent is a small business employer. Dr Bakker contends that the respondent and Mr Xenophon’s electorate and parliamentary offices (hereafter referred to collectively as “the parliamentary offices”) are associated entities for the purposes of s.23(3) of the Act. Section 23 sets out the meaning of a small business employer as follows:
“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.”
[5] Section 382 of the Act provides that a person is protected from unfair dismissal if certain requirements are met including that the person has completed a period of employment with his or her employer of at least the minimum employment period. 1 The minimum employment period is defined in s.383 of the Act as follows:
“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.”
[6] It is agreed that the applicant commenced employment on 6 June 2011 and that she had a period of employment of approximately 7.5 months service at the date of dismissal.
The respondent’s case
[7] An affidavit sworn by Mr Xenophon 2, the principal and sole proprietor of the respondent, stated that at the time the applicant was dismissed the respondent employed two legal practitioners (including the applicant) and four administrative staff. Mr Xenophon stated that at all times between 6 June 2011 and 25 January 2012 the respondent employed less than 15 employees.
[8] Ms Walker submitted that the staff of Mr Xenophon’s parliamentary offices are employees of the Commonwealth not of Mr Xenophon, and cannot therefore be counted as employees of the respondent. She referred to s.20 of the Members of Parliament (Staff) Act 1984, which states:
“20 Senators and Members may employ staff
(1) A Senator or a Member of the House of Representatives may, on behalf of the Commonwealth, employ, under an agreement in writing, a person as a member of the staff of the Senator or Member.
(2) The power conferred on a Senator or Member of the House of Representatives by subsection (1) is not exercisable otherwise than in accordance with arrangements approved by the Prime Minister, and the exercise of that power is subject to such conditions as are determined by the Prime Minister.
[9] Ms Walker stated that it also evident from the Members of Parliament (Staff) Act 1984 Annual Report 2010-11 3 and the Commonwealth Members of Parliament Staff Enterprise Agreement 2010-2012 (the Agreement)4 that the Commonwealth is the employer of the employees in the parliamentary offices. She referred to the Long Service Leave and Maternity Leave provisions of the Agreement which apply the Long Service Leave (Commonwealth Employees) Act 1976 and the Maternity Leave (Commonwealth Employees) Act 1973, respectively,5 and this was said to be further evidence that parliamentary office staff are employees of the Commonwealth.
The applicant’s case
[10] Dr Bakker filed written submissions and an affidavit. 6 As recorded earlier, Dr Bakker’s contention is that the respondent and Mr Xenophon’s parliamentary offices are associated entities. She submitted that in accordance with s.23(3) of the Act, these ‘entities’ are taken to be one entity for the purposes of calculating the number of employees employed by the respondent. Dr Bakker listed the employees of these ‘entities’ in her affidavit.7 Despite her submission that there are 15 employees in total, there are in fact only 14 employees identified in her affidavit and one of the identified employees is Mr Xenophon. On this basis alone the respondent’s jurisdictional objection is made out. This issue was raised by Ms Walker in her submissions,8 but was not addressed by the applicant.
[11] In relation to the submission that employees in the parliamentary offices are employed by the Commonwealth, Dr Bakker contended that Mr Xenophon exercised all the rights of an employer in relation to the control he exercised over these employees and that a reasonable person would regard him as the employer.
Consideration
[12] In accordance with s.12 of the Act “associated entity” has the meaning given by s.50AAA of the Corporations Act 2001 (the Corporations Act). That section provides as follows:
“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 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] In order for Dr Bakker’s argument to succeed she must establish that the respondent and the parliamentary offices are not only associated but that they are entities. Entity is defined in s.64A of the Corporations Act in the following terms:
“64A Entities
Except in Chapter 2E 9, a reference to an entity:
(a) is a reference to a natural person, a body corporate (other than an exempt public authority), a partnership or a trust; and
(b) includes, in the case of a trust, a reference to the trustee of the trust.”
[14] Dr Bakker submittedthat the parliamentary offices are ‘entities’ of the Australian Electoral Commission, which is a statutory authority and a body corporate. I do not accept this submission. Electorate and parliamentary offices are not related to the Australian Electoral Commission, which is established under the Commonwealth Electoral Act 1918 and which is concerned with electoral, not electorate, matters. 10 There is no evidence or material before me on which to conclude that the parliamentary offices of Mr Xenophon are entities within the meaning of s.64A of the Corporations Act.
[15] The argument that Mr Xenophon is the employer of the employees of the parliamentary offices is, on its face, an attractive proposition. Mr Xenophon exercises a level of control, which includes the right to hire and fire the employees, control the work performed and supervise the employees, which reflects key indicia of an employer/employee relationship. However the terms of the Members of Parliament (Staff) Act 1984 make it clear that a Member of Parliament acts in the capacity of an agent of the Commonwealth in relation to the employment of staff in parliamentary offices.
[16] This position is reinforced by the terms of s.795(4) of the Act, which sets out the meaning of “public sector employment” and includes, inter alia, employment of, or service by, a person in any capacity under a law prescribed by the regulations. 11 Regulation 6.08 of the Fair Work Regulations 2009 provides as follows:
“6.08 Public sector employer to act through employing authority — meaning of public sector employment
Employment or service that is public sector employment
(1) For paragraph 795 (4) (h) of the Act, each of the following laws is prescribed:
(aa) the Australian Civilian Corps Act 2011;
(a) the Australian Federal Police Act 1979;
(b) the Governor-General Act 1974;
(c) the Naval Defence Act 1910;
(d) the Members of Parliament (Staff) Act 1984.”
[17] I conclude that the employees of the parliamentary offices are public sector employees. Consequently, even if the parliamentary offices were associated entities of the respondent, which I reject, I would be unable to conclude that the employees engaged within the parliamentary offices should be counted as employees of the respondent for the purposes of s.23 of the Act.
The application for costs
[18] The respondent seeks an order for costs against Dr Bakker pursuant to s.611 of the Act, which is in the following terms:
“611 Costs
(1) A person must bear the person’s own costs in relation to a matter before FWA.
(2) However, FWA may order a person (the first person) to bear some or all ofthe costs of another person in relation to an application to FWA if:
(a) FWA is satisfied that the first person made the application, or the first person responded to the application, vexatiously or without reasonable cause; or
(b) FWA is satisfied that it should have been reasonably apparent to the first person that the first person’s application, or the first person’s response to the application, had no reasonable prospect of success.
Note: FWA can also order costs under sections 376, 401 and 780.
(3) A person to whom an order for costs applies must not contravene a term of the order.
Note: This subsection is a civil remedy provision (see Part 4-1).”
[19] The respondent relies upon s.611(2)(b) in support of the costs application. Ms Walker submitted that it should have been reasonably apparent to a person in Dr Bakker’s position that the application had no reasonable prospect of success in light of the factual and statutory context in which it was brought. In this regard it was said to be relevant that Dr Bakker was legally qualified and had practiced as a legal practitioner, and that the facts available to her included the Members of Parliament (Staff) Act 1984. As such it should have been reasonably apparent to Dr Bakker that the employees in Mr Xenophon’s parliamentary offices are not his employees but employees of the Commonwealth. Similarly, it should have been reasonably apparent to Dr Bakker that the respondent and Mr Xenophon’s parliamentary offices are not associated entities as defined in the Corporations Act.
[20] Ms Walker acknowledged that the Tribunal has a discretion as to whether to award costs in the event that s.611(2)(b) of the Act is satisfied, but submitted that the circumstances of this case, and in particular the qualification and experience of Dr Bakker, supported the exercise of that discretion in favour of the respondent.
[21] Dr Bakker submitted that she experienced some difficulty in ascertaining the relevant corporate relationships and restated her view that the respondent and his parliamentary offices were associated entities and that Mr Xenophon exercised the control of an employer in relation to the staff of these offices.
Consideration and conclusion as to costs
[22] I respectfully adopt the approach of Lawler VP in Australian Broadcasting Commission v Scott Dickinson 12 to the meaning of the phrase “no reasonable prospects of success”. That is, that in order to satisfy that the test of no reasonable prospects of success the application must be manifestly untenable or groundless on the facts apparent to the applicant. In determining the facts apparent to the applicant, His Honour cited the following passage from Abbey v Daycare Management Pty Ltd13:
“[a] distinction must be drawn between facts which were reasonably susceptible to objective specification and facts which turn on matters of impression or interpretation. In relation to facts that were reasonably capable of objective specification, a costs application will be determined by reference to the facts as found. In the case of facts that turn on matters of impression or interpretation, the Commission ought proceed on the basis of the facts as reasonably perceived by the party against whom the application is made.”
[23] Dr Bakker’s qualification and experience are matters to be taken into account. Putting to one side the number of employees she identified in her affidavit, I am inclined to the view that the flaws in Dr Bakker’s arguments should have been readily apparent to her and as such, that she should have realised that her case had no reasonable prospects of success. I would not however be inclined to exercise the discretion to award costs in favour of the respondent on this basis.
[24] The most significant matter in my consideration of s.611(2)(b) of the Act is the fact that Dr Bakker has not put forward any evidence or submissions to satisfy the Tribunal that, if her arguments were accepted, her application would be within jurisdiction. On Dr Bakker’s own affidavit, the respondent would still meet the definition of a small business employer under s.23(1) of the Act in circumstances where it is acknowledged that she had not completed the required minimum employment period of 12 months. Even if I were to accept that Dr Bakker proceeded on a miscalculation of the number of employees she identified in her affidavit, she must have been aware that Mr Xenophon is not an employee of the respondent or of his parliamentary offices and that the minimum requirement of 15 employees has not been met.
[25] I have concluded that in this circumstance it is appropriate to exercise my discretion to order that Dr Bakker bear the costs of the respondent. An order to this effect is issued with this decision.
DEPUTY PRESIDENT
Appearances:
Dr M Bakker on her own behalf
Ms G Walker of counsel for the Respondent
Hearing details:
2012
Adelaide
May 18
1 Section 382(a) of the Act.
2 Ex R2. The applicant’s curriculum vitae, marked as Attach NX-1 to the affidavit, was deleted on the basis of relevance.
3 At p 3.
4 At Part A Introduction.
5 At cl 50 and 51.
6 Ex A1 and Ex A2, respectively. The respondent objected to the inclusion of a number of paragraphs in Ex A1 on the basis that they addressed the substantive dismissal rather than the jurisdictional issue. As a result, paras 2-6 inclusive and 14-37 inclusive were deleted from the affidavit.
7 Ex A2 at paras 11, 12 and 13.
8 Tr [35].
9 Chapter 2E deals with related party transactions and is not relevant to the matters in issue.
10 Section 7 of the Commonwealth Electoral Act 1918 sets out the functions of the Australian Electoral Commission.
11 Section 795(4)(h) of the Act.
12 [2007] AIRC 502, 13 July 2007.
13 PR946186 at para [8], 30 April 2004.
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