FEDERAL COURT OF AUSTRALIA
Fair Work Ombudsman v Ramsey Food Processing Pty Ltd [2011] FCA 1176
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Details
- Case
- [2011] FCA 1176
- Decision Date
CaseChat Overview and Summary
In the matter of Fair Work Ombudsman v Ramsey Food Processing Pty Ltd, the primary issue before the court was to determine whether Ramsey Food Processing Pty Ltd, and not Tempus, was the true employer of the employees in question. The dispute arose from the termination of employment of several workers who claimed that they were not paid amounts due to them upon termination. The respondents argued that Tempus, a company inter-positioned between Ramsey Food Processing and the employees, was the true employer, thus absolving Ramsey from liability. However, the court found that the interposition of Tempus was a sham, and Ramsey Food Processing remained the true employer of the complainant employees.
The legal issues the court needed to decide included whether the interposition of Tempus effectively separated the employment relationship from Ramsey Food Processing, and if the arrangements amounted to a sham. The court also had to consider whether the manager of Ramsey Food Processing was knowingly involved in the contraventions of the Workplace Relations Act 1996 (Cth). The court examined the nature of the employment arrangements, the control exercised over the employees, and the purpose behind the interposition of Tempus.
The court's reasoning was based on the substance of the employment arrangements and their actual components and effect. It found that the interposition of Tempus did not obscure the real substance of the arrangement. The court concluded that Tempus never became, nor acted as, the employer of the complainant employees, as it did not exercise any form of control over their engagement, performance of work, payment or termination of employment. Instead, all such responsibilities were borne by Ramsey Food Processing. The court further found that the arrangements were a sham, established with the origin in deceit, and intended to frustrate, deny or defeat the entitlements of the employees.
As a result, the court held that Ramsey Food Processing was the true employer of the employees and, therefore, liable for the amounts due to them upon termination. The manager of Ramsey Food Processing was also found to be knowingly involved in the contraventions of the Workplace Relations Act 1996 (Cth). The court ordered that the proceedings be adjourned to a date to be fixed, to make orders in accordance with the accompanying Reasons for Judgment.
The legal issues the court needed to decide included whether the interposition of Tempus effectively separated the employment relationship from Ramsey Food Processing, and if the arrangements amounted to a sham. The court also had to consider whether the manager of Ramsey Food Processing was knowingly involved in the contraventions of the Workplace Relations Act 1996 (Cth). The court examined the nature of the employment arrangements, the control exercised over the employees, and the purpose behind the interposition of Tempus.
The court's reasoning was based on the substance of the employment arrangements and their actual components and effect. It found that the interposition of Tempus did not obscure the real substance of the arrangement. The court concluded that Tempus never became, nor acted as, the employer of the complainant employees, as it did not exercise any form of control over their engagement, performance of work, payment or termination of employment. Instead, all such responsibilities were borne by Ramsey Food Processing. The court further found that the arrangements were a sham, established with the origin in deceit, and intended to frustrate, deny or defeat the entitlements of the employees.
As a result, the court held that Ramsey Food Processing was the true employer of the employees and, therefore, liable for the amounts due to them upon termination. The manager of Ramsey Food Processing was also found to be knowingly involved in the contraventions of the Workplace Relations Act 1996 (Cth). The court ordered that the proceedings be adjourned to a date to be fixed, to make orders in accordance with the accompanying Reasons for Judgment.
Orders
Orders of the court
1. The proceedings be adjourned to a date to be fixed, to make orders in accordance with the accompanying Reasons for Judgment.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Golden Plains is an example of a factual scenario where employment arrangements were separated from an operating or trading company in a way which was legally effective. However, that is not the present case. Just as there is no support in the authorities for the proposition that employment arrangements can never be so separated, there is also no support in the authorities to suggest that all that is required is the formal establishment (or purchase) of a separate legal entity, establishment of a separate bank account and the use in various quarters of a new or different name.Application of the legal principles to the facts I shall deal, in due course, with specific claims for relief arising from the termination of employment of the complainant employees, but as I said at the outset of this judgment, the principal question for decision is whether Ramsey Food Processing, and not Tempus, was the true employer of the employees in question. The respondents’ position appeared to be that Ramsey Food Processing would not be the employer of employees at the abattoir if a shelf company, Tempus, was interposed between it and the employees, if money passed through a separate bank account and if matters such as workers compensation insurance, superannuation contributions and taxation obligations were handled in the name of the interposed company and paid for through its bank account. No authority goes so far. Indeed, the authorities uniformly proceed on the footing, whatever the factual findings in a particular cases, that bare formalities would never be enough to obscure the real substance of an arrangement. When I look to the substance of the arrangements, and their actual components and effect, I have no hesitation in concluding that they neither constitute or evidence employment by Tempus of any person. I am quite satisfied that, whatever was the position before 16 October 2006 (about which it is not necessary to make a definite finding), after that date the employer (at least of all the complainant employees) was Ramsey Food Processing. When regard is paid to the purpose for which Tempus was acquired that conclusion is strengthened. One substantial flaw in the respondents’ position was that they did not themselves give effect, as a matter of fact, to the legal separation which they asserted. Nor was it evident in the earlier arrangements, so far as the evidence in the present case disclosed. When Tempus became involved, there was no evidence that anything changed or that at the abattoir any new employment actually commenced for the employees concerned. A similar thing may be said about the treatment of employees who, in January 2008, were transferred to Paul Allen Contracting (offal and tripe room employees) or, in April 2008 to Mortimer Administration (boning room employees), or to Ramsey Pastoral (employees at “Turangga Farm”) or, finally, in November 2008 to Paul Allen Contracting (Tempus “employees”). These arrangements were treated as a form of book entry. That circumstance reveals their true character.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
The respondents thereby rejected the indemnity freely given to Tempus as an integral part of the arrangement and dishonoured the promise that Ramsey Food Processing would stand behind Tempus and make good obligations to employees at the abattoir incurred in its name. The ready rejection of these obligations also supports the conclusion that the arrangements were, from first to last, a sham.Summary of conclusions of fact and law When the legal principles are applied to the facts of the present case, three possible conclusions (to which I earlier referred) are open. Each leads to the same result. First, despite the agreement between Mr Ramsey and Mr Considine in October 2006, the deeds dated 16 October 2006 and 19 May 2007, the steps taken in the name of Tempus and the use of a separate bank account, Tempus never became, nor acted as, the employer of the complainant employees. Tempus did not exercise any form of control over the engagement, performance of work, payment or ultimate termination of employment of any of the complainant employees. All such responsibilities were borne by some different legal entity. On that conclusion, the only possible alternative for consideration is Ramsey Food Processing, in whose business the complainant employees worked and on whose behalf all the functions referred to above were carried out. Those findings are sufficient to sustain the present application and warrant the orders sought against Ramsey Food Processing, and against Mr Ramsey for short additional reasons soon to be given. Secondly, if any steps taken to inter-position Tempus between the complainant employees and Ramsey Food Processing are to be regarded as having any effect at all it is abundantly clear that everything which was done in the name of Tempus was done by Tempus (or others) acting on behalf of Ramsey Food Processing. All the things done in the name of Tempus were done by persons who were themselves acting in the course of the business, and on behalf, of Ramsey Food Processing. Those persons were Mr Ramsey, Mr Marshall and Ms Park. Mr Considine’s own contribution was minor, co-operative and purely formal. On this approach, recognising the separate legal existence of Tempus and giving some weight to the things done in its name, the conclusion which must be reached is that anything done by Tempus was done as the agent for Ramsey Food Processing and not by Tempus independently. Apart from its bare legal existence, Tempus did not function independently. It had no business of any sort. It earned no income. There was no rational explanation for conduct in its name except to serve the interests of Ramsey Food Processing. It was therefore, at best, an agent for Ramsey Food Processing which, for that reason also, cannot effectively resist the present application or the orders sought. Nor can Mr Ramsey. Thirdly, although this further conclusion is not a necessary finding for either of the earlier two conclusions, everything done in the name of Tempus was, in my view, a sham. The establishment of Tempus had its origins in deceit. Later, despite the assurances given to Mr Considine, the written indemnity, the fact that accrued entitlements were shown in the books kept for Tempus and that money was received into the Tempus bank account sufficient to cover all the obligations identified in the present proceedings, persons acting on behalf of Ramsey Food Processing acted to frustrate, deny or defeat the entitlements of employees identified in the present proceedings. The matters relied on to justify this conduct were based, from beginning to end, on deceit and on a “sham” arrangement. That conclusion supports and reinforces the earlier two, although not necessary for either.
Ratio Decidendi
Legal Principle Established
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