Elliot Wilson v Nickys Barbershop Pty Ltd

[2024] FWC 3474

[2024] FWC 3474

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.394—Unfair dismissal

Elliot Wilson
v

Nickys Barbershop Pty Ltd

(U2024/4798)

COMMISSIONER PERICA MELBOURNE, 12 DECEMBER 2024

Application for an unfair dismissal remedy

1. On 28 April 2024, Mr. Elliot Wilson made an application to the Fair Work Commission under s 394 of the Fair Work Act 2009 (Cth.) (FW Act) for a remedy, alleging he had been unfairly dismissed from his employment with Nickys Barbershop Pty Ltd (Nicky’s). Mr. Wilson seeks compensation.

1. Nicky’s has raised a jurisdictional objection alleging that Mr. Wilson’s employment did not meet the one year minimum employment period (MEP) required for a small business employer. Directions were issued on that jurisdictional question. Mr. Wilson and Nicky’s were directed to file an outline of argument and evidence.

1. On 5 September 2024, I wrote to the parties by e-mail and noted that “there may have been a transfer of employment” and directed them to the relevant parts of the Unfair Dismissal Benchbook. I requested the parties to address the issue at the determinative conference.

1. On 11 September 2024, the jurisdictional objection was heard remotely through Microsoft Teams by way of Determinative Conference. Mr. Wilson attended with his legal representative, Mr. Lavery of EJ Lavery & Company Solicitors. Mr. Matthew Campbell appeared for the Respondent.

1. For the following reasons, I am satisfied Mr. Wilson was a person who was protected from unfair dismissal within the meaning of s 382 of the FW Act.

BACKGROUND FACTS

1. In August 2022, Mr. Wilson commenced employment with The Conductor Pty Ltd,[1] (Conductor) a company that runs two barbershops: one in Carnegie, the other in Highett. From 12 January 2023, he started working at Nicky’s at 264 Swan Street, Richmond. He continued to work at that location until his employment was terminated on 9 April 2024.

2. His pay slips indicate that during a period commencing on 3 October 2022 and ending on 9 April 2024, he was paid by three companies: Conductor, Nicky’s and Elephant Stone Pty Ltd (Elephant Stone). By a letter dated 9 April 2024, his employment with “Nicky’s and the Conductor” was terminated. The pay slips in evidence relate to four periods:

·   For the unbroken period from 3 October 2022 until 5 February 2023 (126 days), he was paid by Conductor on a weekly basis as a casual.[2]

·   For the unbroken period from 6 February 2023 to 5 March 2023 (28 days) he was paid by Elephant Stone.

·   From 6 March 2023 until 19 May 2023 (75 days), he was paid by Nicky’s.[3]

·   From 26 June 2023 until 9 April 2024 (289 days) – his termination date – he was paid by Nicky’s.[4]

Period of absence from work

1. Mr. Wilson explains the gap between May and June 2024 in his evidence. He says he took paid personal leave from 12 May 2023 until 19 May 2023 and then took a period of authorised unpaid leave from 20 May 2023 until 24 June 2023 (a period of unpaid leave of 36 days). Mr. Matthew Campbell, a director and secretary of Nicky’s, stated in an e-mail to the Commission that Mr. Wilson took an unauthorised leave of absence for “three months from April to June 2023”.[5] The pay slips refute Mr. Campbell’s contention. They are more consistent with the statement of Mr. Wilson. The fact Mr. Wilson resumed work on his return implies that the leave was in fact authorised.

Termination letter

1. On 9 April 2024, Mr. Wilson’s employment was terminated by Mr. Campbell by a letter. The letterhead says, “the Conductor Barbershop, Nicky’s Barbershop 418 Neerim Road, Carnegie, 3103”. The first sentence of that letter states: “I regret to inform you that your employment with The Conductor and Nicky’s Barbershop Pty Ltd is hereby terminated”. The letter is unsigned but it has a footer which reads “Matthew Campbell, Director, The Conductor Barbershop and Nicky’s Barbershop”. At the base of the letter are links to the websites of both Conductor and Nicky’s.

The July 2023 Conductor Contract

1. On 22 July 2023 Mr. Wilson and Mr. Campbell signed what purports to be a contract of employment with the Conductor as a Senior Barber on a full-time basis (“Conductor Contract”). The wage was $70,000 a year.[6] It was a term of that contract that Mr. Wilson would be “required to perform your duties at 418 Neerim Road Carnegie or 276 Highett Road or elsewhere as reasonably directed by your employer”.

1. Mr. Wilson, in his witness statement, states that he never worked at either of the Conductor barbershops on or after 22 July 2023. During this period, he continued to work at the Nicky’s barbershop on Swan Street, Richmond.[7] He explained the reason he signed this contract with Conductor was that his work visa was through Conductor and “for the visa to be granted, you must have a contract of employment”. In evidence, he stated that the reason he signed the contract was because his work visa application was made through Conductor.[8]

Conductor, Nicky’s and Elephant Stone

1. A company search of Conductor performed on 19 August 2024 shows that from 1 January 2022, Mr. Matthew Campbell was a director of that company. He was also the Secretary of that company from 9 May 2022. He also holds five ordinary shares in Conductor.[9] Elephant Stone Pty Ltd holds ten ordinary shares in the Conductor. There are nineteen ordinary shares issued in Conductor.

1. A company search of Nicky’s performed on 19 August 2024 shows that Mr. Campbell was a director of that company since 6 December 2022 and he holds six of the twelve ordinary shares in that company. Mr. Jay Street is also a director and holds the other six of the twelve ordinary shares.

1. A company search of Elephant Stone performed on 11 September 2024 shows Mr. Campbell has been a director and secretary of that company since 8 June 2020 and holds both of the two ordinary shares in that company.

The contending arguments

1. Mr. Campbell argues Mr. Wilson was employed by Conductor from 23 June 2023 pursuant to the contract and was dismissed on 9 April 2024. He therefore does not reach the one year minimum employment period (MEP) for a small business employer.

1. Mr. Lavery on behalf of Mr. Wilson makes two alternative arguments:

·   The pay slips show that Mr. Wilson was employed by Nicky’s for a total period of over twelve months between 6 March 2023 and 9 April 2024; or

·   Nicky’s, the Conductor and Elephant Stone are associated entities. Therefore, the periods of employment with each should count as continuous service for assessing the minimum employment period.

RELEVANT LAW AND LEGAL CONSIDERATIONS

When is a person protected from unfair dismissal?

1. Section 382 of the FW Act provides that 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)…. [Emphasis added]

Minimum employment period and period of employment

1. Section 383 provides a definition of minimum employment period:

383  Meaning of minimum employment period

The minimum employment period is:

(a)…; or

(b)if the employer is a small business employer—one year ending at that time.

1. Section 384 defines “period of employment” as follows:

   384Period 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 as a regular casual employee; 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.

1. Section 22 defines “continuous service” as referred to in ss 384(1)-(3) as follows:

22Meanings 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)…

1. Section 22(5) describes the effect of a transfer of employment on “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.

   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)…

   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)…

What is an associated entity?

1. Section 12 of the FW Act provides as follows:

   12The Dictionary

   In this Act:

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

1. Section 50AAA of the Corporations Act 2001 (Corporations Act) states:

   50AAAMeaning of associated entity

   (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.

1. Under s 383, the minimum employment period (MEP) for a small business employer is “one year”. “Period of employment” is defined in s 384 as “the period of continuous service the employee has completed with the employer at that time as an employee”.

1. Under s 384(2)(a), a period of service as a casual employee counts towards the calculation of the period of service if the employee was a “regular casual employee and if the employee had a reasonable expectation of continuing employment on a regular and systematic basis”.

1. Continuous service is defined in s 22 as a period during which the employee is employed by the employer but does not include any “excluded period”. Any period of unpaid leave or unpaid authorised absence is an excluded period.

1. Based on Mr. Wilson’s evidence and the payslips, it is clear Mr. Wilson was on a period of unpaid leave or unpaid authorised absence from 20 May 2023 to 24 June 2023, a period of 36 days that must be excluded from any calculation of a period of continuous service. By s 22(3), this excluded period does not break Mr. Wilson’s continuous service with Nicky’s but does not count towards the length of Mr. Wilson’s service for the purposes of the MEP. It is subtracted from the length of service.

1. The meaning of “continuous service” is expanded by s 22(5). If there is a transfer of employment, any period of service with the first employer counts as service with the second employer, and the time between the termination of the employment with the first employer and the start of employment with the second employer does not break continuous service.

1. Section 22(7) (a) contains the conditions for a transfer of employment that must be satisfied where the employers are associated entities: The employee commences employment within 3 months after the termination of employment with the first employer; and the first employer and the second employer are associated entities at the time the employee becomes employed by the second employer. The datum point for assessment of whether the companies are “associated entities” is the time the employee became employed by the “second employer”.
   
   

2. If Conductor, Elephant Stone and Nicky’s are associated entities at the time that Mr. Wilson became employed by Elephant Stone and then Nicky’s, the employment with each of those entities are counted as continuous service for calculating the MEP.

CONDUCTOR CONTRACT

1. A contract is formed if there is an offer, acceptance and consideration. In an employment contract, the consideration is usually wages. There are no payslips in evidence for the period from 23 June 2023 that state Mr. Wilson was paid by Conductor. All pay slips show from 26 June 2024 until the termination of his employment he was paid by Nicky’s.

1. Mr. Campbell explained this discrepancy as follows:

MR. CAMPBELL: I do have a contract saying sponsorship was under The Conductor Barbershop. He did resign on his own discretion and sent that across. He's resigned, left the business. We employed him under a different business. His sponsorship was via The Conductor Barbershop, which is a different business he was getting paid from. He signed a contract - - -

THE COMMISSIONER: Yes. There's going to be a contest on that.

MR. CAMPBELL: So our accountant is due to transfer and merge. He was supposed - all those payslips from (indistinct) our accountant was to deal with and transfer over. It's a complete - it's supposed to be a completely different set up.[10]

1. There is no evidence before me that Mr. Wilson resigned from Nicky’s. I have no direct evidence from the accountant that he was to “deal with and transfer over” Mr. Wilson.

1. The pay slips provide evidence that from March 2023 until April 2024 (with a break of 36 days) Mr. Wilson was paid by Nicky’s. It was open to Mr. Campbell to adduce evidence to contest this and he did not do so. Based on the pay slips, I cannot be satisfied that from June 2023 Mr. Wilson was ever paid by Conductor. On the contrary, they show he was paid by Nicky’s.

1. On the evidence, I cannot find that wages were paid by Conductor under the Conductor Contract. The element of consideration needed for the formation of a contract is not proven on the evidence. The pay slips establish Mr. Wilson was paid by Nicky’s. I am satisfied he was employed by it during the purported period of operation of the Conductor Contract.

NICKY’S SERVICE FROM MARCH 2023 TO APRIL 2024 AND THE “EXCLUDED PERIOD”

1. The pay slips from 6 March 2023 until 19 May 2023 (75 days) and then 26 June 2023 until 9 April 2024 (289 days) where Mr. Wilson was paid by Nicky’s could constitute the small business MEP. The period by which he took leave from 20 May to 25 June 2024 is excluded.

1. The effect of s 22(b) is a period of unpaid leave does not count as service for the calculation of an MEP because it is an “excluded period”. The effect of s 22(3) is, although the unpaid leave period is not counted as contributing to the length of service, the gap does not break an employee’s continuous service. So, the service before and after the excluded period are treated as continuous.

1. This means the 36 days Mr. Wilson was on unpaid leave is subtracted from a calculation of the length of his service for the MEP, but the service before and after the break are treated as if they were continuous.

1. From 6 March 2023 until 19 May 2023 (his last day of paid leave) is 75 days. The 36 days between 20 May 2023 until 24 June 2024 are excluded. From 26 June 2023 until 9 April 2024 (his termination day) is 289 days. This last period of employment by Nicky’s adds to a total of 364 days, which is one day short of one year, the MEP for a small business.

1. There is another method that Mr. Wilson may reach the MEP for small businesses. That is, if Conductor, Elephant Stone, and Nicky’s are associated entities and there has been a transfer of employment from Conductor to Elephant Stone and then from Elephant Stone to Nicky’s. The service with all three may amount to continuous service.

HAS THERE BEEN A TRANSFER OF EMPLOYMENT BETWEEN CONDUCTOR AND ELEPHANT STONE AND BETWEEN ELEPHANT STONE AND NICKY’S

Are Conductor, Elephant Stone and Nicky’s associated entities?

1. The definition of associated entities in the FW Act has the meaning given by s 50AAA of the Corporations Act. Under s 50AAA(7), one company is an associated entity of the other if a third entity “controls both the principal and the associate and the operations resources and affairs of the principal and associate are both material to the third entity”.

1. Under the definitions in s 64A of the Corporations Act, “entity” includes a natural person such as Mr. Campbell. Mr. Campbell can be the “third entity” under s 50AAA(7).

1. There is a clear relationship between the Conductor, Elephant Stone and Nicky’s:

Conductor

·   Mr. Campbell is a director and secretary of Conductor. He also holds five of the nineteen ordinary shares in Conductor.[11] Elephant Stone Pty Ltd holds ten shares of the nineteen ordinary shares in Conductor. In an e-mail dated 6 August 2024, Mr. Campbell wished to confirm Mr. Wilson “worked for Conductor. At the time of employment Elliot Hunter was Director of the Business. Matthew Campbell purchased the business in December of 2022. Until that point, I was a shareholder”.

Elephant Stone

·   Mr. Campbell is a director and secretary of Elephant Stone. He is the sole shareholder of the two ordinary shares in that company.

Nicky’s

·   Mr. Campbell is one of two directors in Nicky’s. He also has an equal shareholding of six ordinary shares together with Mr. Jay Street. In an e-mail dated 11 September 2024, Mr. Campbell stated: “I have been told to advise everyone also that Jay Street is the Managing Director of Nicky’s has invested 100% of all the capital. My position is as a consultant.”

Did Mr. Campbell “control” Conductor and Elephant Stone, and then Elephant Stone and Nicky’s during the relevant period under s 50AAA(7)(a)?

1. I must consider whether Mr. Campbell is a natural person ‘third entity’

contemplated in s 50AAA (7) of the Corporations Act ‘controls’ Conductor, Elephant Stone and Nicky’s.

1. In Budden v Finke Enterprises Pty Ltd ATF M&L Carlson Family Trust T/A Fused

Café Pender Place (Budden),[12] Commissioner Saunders considered whether a
sole director of several different entities can ‘control’ those separate entities and found:

“Section 64A of the Corporations Act defines “an entity” to include “a natural person”. It follows, in my view, that Mrs Carlson is “an entity (the third entity)” within the meaning of subsection 50AAA(7) of the Corporations Act. My conclusion in this regard is supported by a decision of Judge Riley of the Federal Circuit Court of Australia in Director of theFair Work Building Industry Inspectorate v Vic Metro Brick and Blocklaying Pty Ltd[13] In that case, Judge Riley held (at [85]) that a natural person who was the sole director and shareholder of two corporations was “an entity [who] controls both the principal and the associate” within the meaning of subsection 50AAA(7) of the Corporations Act.”

1. In Salagras v Fingal Glen Pty Ltd atf the Adelaide Riviera Trust T/A Comfort Hotel Adelaide Riviera (Salagras),[14] Commissioner Steel considered a scenario where three different hotels were each owned by a separate unit trust and partly managed by an external accounting firm, where each trust shared a single sole director who was employed by the accounting firm. Commissioner Steel considered that the sole director and another employee of the accounting firm:[15]

“…are effectively controlling these trusts and trustee companies as employees of

[the accounting firm] and the operations, resources or affairs of those entities are
material to [the accounting firm].

…[the accounting firm] being a third entity controls the trustee companies being
the principals, as [the director], an employee of [the accounting firm] is the sole
director of such companies. The unit trusts, the associates are likewise controlled
though the trustee companies by [the director]. The operations, resources or affairs of
the principal and the associate are both material to the third party.”

1. In MacInnnes v Gladstone CC Pty Ltd T/A Len Smith Carpet Court (MacInnes),[16] Commissioner Booth considered a scenario where the sole director of the Respondent ‘Carpet Court’ store was also the sole director of three other ‘Carpet Court’ stores. Commissioner Booth noted the similarity to Salagras and considered:[17]

   “The Corporations Act definition of associated entity includes the control (as defined by s.50AA) by another entity. “Entity” is defined in the s.64A of that Act to include not only other companies but also trusts and individuals. Further ‘control’ is described in s.50AA(1) as “capacity to determine the outcome of decisions about the second entity's financial and operating policies”.

“The notion of control is not restrictive, and extends to, for example a power to veto (emphasis added): Re A Reference to the Federal Court of Australia by the Australian Broadcasting Tribunal Pursuant to Section 22b of the Broadcasting and Television Act 1942 in relation to applications to the Australian Broadcasting Tribunal of Approval,[18] (Full Court, Bowen CJ). Further the test seems not to be limited to operations (for example were decisions of the character ever actually made; did the stores function completely independently), but about the capacity to make such determinations. That capacity will flow from the authority to make determinations rather than historical facts, although past facts might well indicate an actual control, such as joint board meetings.”

1. At the time Mr. Wilson became employed by Elephant Stone (from 6 February 2023), both Elephant Stone and Conductor were controlled by Mr. Campbell.

Elephant Stone

1. He controlled Elephant Stone because he was the director, secretary and sole shareholder in that company.

Conductor

1. His control of Elephant Stone is relevant to his control of Conductor. Mr. Campbell was director, shareholder, and owner of two shares in Conductor. Elephant Stone owns ten of the nineteen ordinary shares in Conductor. By reason of his own shareholding and the shareholding in Elephant Stone (an entity he also controls), he controls the majority shareholding in Conductor.

1. Mr. Campbell’s argument is that, at the time Mr. Wilson was employed (emphasis added): Mr. Elliot Hunter was the Managing Director of Conductor; Mr. Campbell was merely a shareholder; and he purchased the business in December 2022, is not relevant to the date on which the assessment of “associated entity” is made. The relevant date is 6 March 2023, the date Mr. Wilson commenced employment with the second employer, namely Elephant Stone. At that date, Mr. Campbell controlled both Elephant Stone and Conductor.

Nicky’s

1. Mr. Campbell argues at the time that Mr. Wilson commenced employment with Nicky’s, he did not control that company. He says “that Jay Street is the Managing Director of Nicky’s and has invested 100% of all the capital. My position is as a consultant”.

1. The company search establishes that on 6 March 2023, (the time Mr. Wilson took up employment with Nicky’s) Mr. Street and Mr. Campbell were both directors and equal shareholders in Nicky’s.

1. Even if Mr. Street is managing director and invested the capital, Mr. Campbell had some control over Nicky’s. If Mr. Campbell and Mr. Street disagreed on an issue and it was put to a vote, it would lead to impasse. This is equivalent to the “veto power” referred to by Commissioner Booth in MacInnes. Further, on the evidence, it can be inferred by the text of termination letter that he had the power to fire employees of Nicky’s. This illustrates a degree of control of that entity. Someone who holds the position of a mere consultant is not usually a joint director and shareholder with a power to fire employees.

1. I find on 6 March 2023, when Mr. Wilson became employed at Nicky’s (from Elephant Stone), Mr. Campbell controlled Nicky’s in the sense required by s 50AAA (7)(a).

Are the operations, resources and affairs of Elephant Stone, Conductor and Nicky’s material to Mr. Campbell as required by s 50AAA(7)(b)?

1. The operations, resources and affairs of each of Conductor, Nicky’s and Elephant Stone are material to Mr. Campbell. The employment history of Mr. Wilson implies integration between the operations and affairs of all three entities.

·   In the termination letter to Mr. Wilson he refers to himself as a director of both Conductor and Nicky’s. The termination of employment is stated to be from employment with both Conductor and Nicky’s.

·   Mr. Wilson started at Conductor and then moved to Nicky’s.

·   In the letter that embodied the Conductor Contract, Mr. Campbell made Mr. Wilson an offer to work at Conductor when he returned from unpaid leave after he had been working at Nicky’s.

·   Mr. Campbell’s argument that his accountant did not follow his instructions to change Mr. Wilson’s pay slips from Nicky’s to Conductor implies integration between those two entities.

1. As for Elephant Stone, it is a majority shareholder of Conductor and Mr. Campbell is a director of both of those companies. The fact that Mr. Wilson was paid by Conductor, then by Elephant Stone and then by Nicky’s implies some connection between the operation of the three entities.

1. The movement of Mr. Wilson between the three entities implies Mr. Campbell is involved in a business that operates several barbershops which employ barbers through different companies. The employment history of Mr. Wilson indicates the operation of the three companies is integrated through the person of Mr. Campbell, who makes decisions on hiring and firing. It would be passing strange if Mr. Campbell could style himself as a Director of two companies, sack someone from two companies, and then refute the idea that the companies were associated.

1. I am satisfied that Conductor, Elephant Stone and Nicky’s are associated entities under s 50AAA(7) of the Corporations Act. Mr Campell as a “third entity” controls all three companies. The operations, resources and affairs of each of them are material to him. It follows that each of those entities are associated entities under s 12 of the FW Act.

Was there a transfer of employment between Conductor to Elephant Stone?

1. The next question is whether there has been a transfer of employment from Conductor to Elephant Stone and then from Elephant Stone to Nicky’s. The conditions for a transfer of employment under s 22(7)(a) are:

·   the employee becomes employed by the second employer not more than three months after the termination of the employee’s employment to the first employer; and

·   the first employer and the second employer are associated entities when the employee becomes employed by the second employer.

1. For the reasons I have expressed, I am satisfied all three companies are associated entities.

1. The pay slips prove there was no gap between Mr. Wilson’s work as a casual employee employed by Conductor and his work for Elephant Stone. His employment with Conductor was from 3 October 2022 to 5 February 2023. His employment with Elephant Stone commenced on 6 February 2023 to 5 March 2024. It follows the employment of Mr. Wilson with Elephant Stone commenced before the three-month maximum imposed by s 22(7)(a)(i).

1. There is a question whether Mr. Wilson’s period of employment as a casual employee with Conductor counts towards his period of employment.

1. Under s 384(2)(a), a period of service as a casual employee counts towards the calculation of an MEP if the employee was a “regular casual employee” and if the employee had a “reasonable expectation of continuing employment on a regular and systematic basis”. According to his payslips, Mr. Wilson worked week in week out for an unbroken period from 3 October 2022 until 5 February 2023. Mr. Wilson’s employment with Conductor was regular casual employment and he would have had a reasonable expectation of continuing employment.

1. Mr. Wilson became an employee of Elephant Stone on the same day his employment with the Conductor ceased. Elephant Stone and the Conductor are associated entities. It follows that there was a transfer of his employment from Elephant Stone to Conductor under s 22(7)(a).

Was there a transfer of employment from Elephant Stone to Nicky’s?

1. I have found both Elephant Stone and Nicky’s are associated entities. According to the pay slip record, Mr. Wilson commenced work at Nicky’s in the week after his employment with Elephant Stone ceased. There was no gap between his employment with Elephant Stone and his employment with Nicky’s. Mr. Wilson became employed by Nicky’s less than three months after his employment with Elephant Stone ended.

1. It follows there was a transfer of employment of Mr. Wilson between Elephant Stone and Nicky’s under s 22(7)(a).

The effect of the transfers of employment

1. Mr. Wilson was employed by Conductor for 126 days from 3 October 2022 to 5 February 2023. He commenced work with Elephant Stone from 6 February 2023 until 5 March 2023, a period of 28 days. The total period of continuous service for those two entities was 154 days.

1. The effect of the transfer of employment between the Conductor and Elephant Stone means the period of service of Mr. Wilson with the Conductor counts as service with Elephant Stone. This is because the operation of s 22(5) means service with Conductor “counts as service” with Elephant Stone. The period of service with Elephant Stone was as if he had worked for Elephant Stone for the entire period of 154 days.

1. In the subsequent transfer of employment from Elephant Stone to Nicky’s, by operation of law, Mr. Wilson carried the 154 days’ continuous service (with Conductor and Elephant Stone) into his employment at Nicky’s.

1. The 36 days between 20 May 2023 until 25 June 2023 where Mr. Wilson was on unpaid leave does not count as service with Nicky’s for the purposes of calculating to the length of service for the MEP. By operation of s 22(3), it does not break continuous service. Therefore, the two periods of employment with Nicky’s excluding the unpaid leave are counted as one. I have already calculated that period to be 364 days.

1. The period of continuous service for the purpose of calculating the period of employment under s 383(b) includes all his service with Conductor, Elephant Stone and Nicky’s minus the excluded period he was on leave. I calculate that to be 154 days with Conductor and Elephant Stone and 364 days with Nicky’s – a total of 518 days.

1. Mr, Wilson had a period of continuous service of 518 days, which meets the one year MEP required of a small business employer under s 383.

CONCLUSION

1. I have found the period of employment of Mr. Wilson was over one year by reason of the transfer of employment from Conductor to Elephant Stone and then from Elephant Stone to Nicky’s.

2. It follows Nicky’s jurisdictional objection based on the failure of Mr. Wilson to meet the MEP for small businesses fails and is dismissed. The application will proceed to a determination on the merits. Directions will issue in due course.

COMMISSIONER

Appearances:

Mr. Edward Lavery, of E.J.Lavery & Company, on behalf of the Applicant.
Mr. Matthew Campbell on behalf of the Respondent.

Hearing details:

11 September 2024
Microsoft Teams

[1] Digital Court Book (DCB) at 131-133 – Witness Statement of Elliot Wilson.

[2] DCB at 113-129.

[3] DCB at 58-68.

[4] DCB at 69-186.

[5] DCB at 20 – an e-mail dated 6 August 2024.

[6] DCB at 23-29.

[7] DCB at 132

[8] Ibid.

[9] DCB at 41 to 46. A company search of Conductor made on 19 August 2024.

[10] PN25 to 27

[11] Digital Court Book (DCB at) at pp. 41 to 46. A company search of the Conductor made on 19 August 2024

[12] [2015] FWC 8675, [12].

[13] [2015] FCCA 2266.

[14] [2011] FWA 1401

[15] Ibid. [26]-[27].

[16] [2016] FWC 8838

[17] Ibid., [36], [38].

[18] [1987] FCA 6 at [66]

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