Goodfellow and Secretary, Department of Employment
[2016] AATA 611
•17 August 2016
Goodfellow and Secretary, Department of Employment [2016] AATA 611 (17 August 2016)
Division
GENERAL DIVISION
File Number
2015/6198
Re
David Goodfellow
APPLICANT
And
Secretary, Department of Employment
RESPONDENT
DECISION
Tribunal Member K Millar
Date 17 August 2016 Place Adelaide The Tribunal sets aside the decision of the Secretary and in substitution it is decided that Mr Goodfellow is eligible for an advance under section 10 of the Fair Entitlements Guarantee Act 2012.
...................[Sgd].......................
Member K Millar
CATCHWORDS
EMPLOYMENT - Fair Entitlement Guarantee - claim for advance under Fair Entitlements Guarantee Act 2012 - whether applicant's employment with a particular employer - whether end of employment occurred less than 6 months before appointment of insolvency practitioner - decision set aside.
LEGISLATION
Fair Entitlements Act 2012
CASES
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 63 ALR 513
Brambles Holdings Ltd v Bathhurst City Council [2001] NSWCA 61
Damevski v Guidice [2003] FCAFC 252
Ormwave Pty Limited & Anor v Smith [2007] NSWCA 210
Wilton & Cumberland v Coal & Allied Operations Pty Ltd [2007] FCA 725
McClusky v Karagiozis [2002] FCA 1137
Fair Work Ombudsman v Priority Matters Pty Ltd & Anor and Fair Work Ombudsman v Superlattice Solar & Anor Pty Ltd and Fair Work Ombudsman v Geneasys Pty Ltd & Anor and Fair Work Ombudsman v Kia Silverbrook & Anor and Fair Work Ombudsman v Mpowa Pty Ltd & Anor [2016] FCCA 1474REASONS FOR DECISION
Member K Millar
17 August 2016
BACKGROUND
Mr Goodfellow started work for Silverbrook Research Pty Ltd (Silverbrook)[1] as a trainee patent attorney in 2003, and qualified as a patent attorney in 2005.
[1] Silverbrook later changed its name to Worldwide Speciality Property Services Pty Ltd, but for the purposes of this decision, this entity is referred to as Silverbrook.
A liquidator was appointed to Silverbrook on 16 April 2014, and on 28 October 2014 Mr Goodfellow made a claim under the Fair Entitlements Guarantee Act 2012 (the Act) for an advance of his unpaid entitlements. The Act provides for the Commonwealth to pay an advance of unpaid employee entitlements to former employees of an insolvent or bankrupt employer where the end of the employment was connected with the insolvency or bankruptcy, and the employee cannot get payment of the entitlements from other sources. The Commonwealth can then recover the advances through the winding up or bankruptcy of the employer and from other payments former employee receive for their entitlements.
For an employee to be eligible for an advance under the Act, the end of the employment must have occurred less than six months before the appointment of an insolvency practitioner for the employer.
Silverbrook is one of a number of entities Mr Kia Silverbrook and Ms Janette Lee incorporated to further Mr Silverbrook’s inventions. Another of these entities is Priority Matters Pty Ltd (Priority Matters), and Mr Silverbrook and Ms Lee are also the directors of Priority Matters. Priority Matters has not had a liquidator appointed.
Mr Goodfellow’s claim for an advance was refused by the Secretary, Department of Employment as a delegate of the Secretary found Mr Goodfellow was employed by Priority Matters from 26 March 2010. As a result, the Secretary found Mr Goodfellow was not employed by Silverbrook in the six months before the appointment of an insolvency practitioner for Silverbrook and was not eligible for an advance. This decision was affirmed on internal review on 2 November 2015.
Mr Goodfellow maintains he continued to be employed by Silverbrook until he resigned on 28 October 2013.
In issue in this matter is whether Mr Goodfellow is eligible for an advance under the Act. This turns on whether Mr Goodfellow was employed by Silverbrook or Priority Matters in the six months before the appointment of an insolvency practitioner to Silverbrook on 16 April 2014.
LEGISLATIVE FRAMEWORK
Under s 40 of the Act, the Tribunal can review a decision on whether a person is eligible for an advance that is made by a delegate of the Secretary and affirmed on internal review under Subdivision B of the Act. A decision to refuse Mr Goodfellow’s claim under the Act was made by a delegate of the Secretary on 5 July 2015 and was affirmed on internal review on 2 November 2015.
To be eligible for an advance under the Act, the person must make an effective claim for the advance under s 14 of the Act. Mr Goodfellow made an effective claim on 28 October 2014.
The person must also be eligible for the advance under s 10 of the Act. Section 10 of the Act contains a number of requirements. In issue are the requirements in subsections 10(1)(a), (b), (c) of the Act, which state:
(1) A person is eligible for an advance if the Secretary is satisfied of all of the following:
(a) the person's employment by a particular employer has ended;
(b) the commencement of this section, an insolvency event happened to the employer;
(c) the end of the employment:
(i) was due to the insolvency of the employer; or
(ii) occurred less than 6 months before the appointment of an insolvency practitioner for the employer; or
(iii) occurred on or after the appointment of an insolvency practitioner for the employer;
….
The remaining requirements in subsection 10(1) are not in dispute, and it is agreed that if Mr Goodfellow meets paragraphs 10(1)(a), (b) and (c) of the Act, he will be eligible for an advance. In effect, the only issue in dispute is whether at the time he resigned on 28 October 2013, Mr Goodfellow was employed by Silverbrook or Priority Matters.
Section 35 of the Act states that for the purposes of deciding whether a person is eligible for an advance for the employment of the person by the employer, the Secretary may presume that information relating to the person that is given to the Secretary by an insolvency practitioner for the employer is accurate. In this case, the insolvency practitioner for Silverbrook advised Mr Goodfellow was employed by Priority Matters,[2] and the Secretary relies on the presumption in s 35 of the Act. This presumption may be displaced by evidence to the contrary.
[2] Exhibit B1 p 121.
RELEVANT AUTHORITIES
Much of the case law regarding of whether a person is an employee relates to distinguishing between an employee and an independent contractor. Whether Mr Goodfellow is an employee is not in issue in this case, the issue is identifying who was his employer at the relevant point in time. As such, much of the law surrounding the tests for whether a person is an employee or an independent contractor is only of assistance in so far as it relates to identifying the particular employer.
An analysis of the authorities surrounding employment generally starts with Stevens v Brodribb Sawmilling Co Pty Ltd[3] which states that an employment relationship is characterised by the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to exclusive services of the person engaged and the right to dictate the place of work, hours of work and the mode of remuneration. In determining whether there is an employment relationship, the totality of the relationship as a whole must be considered.[4]
[3] (1986) 63 ALR 513.
[4] per Mason J at 521.
Brambles Holdings Ltd v Bathhurst City Council[5] looks to whether in all of the circumstances an agreement can be inferred, and what a reasonable person in the position of the parties would think as to whether there was a concluded agreement.[6]
[5] [2001] NSWCA 61.
[6] per Heydon JA at 81.
In the Full Court of the Federal Court decision of Damevski v Guidice[7] in issue was whether Mr Damevski, who had been employed by Endoxos Pty Ltd, had been transferred to the employment of MLC Workplace Solutions Pty Ltd. It was held by Justice Marshall, with whom Justice Wilcox agreed, that despite the termination of the employment contract with Endoxos, the payment of entitlements from Endoxos, and the transfer of payment wages by MLC, that Mr Damevski remained employed by Endoxos under an informal contract that commenced when he next attended work. It was held there was no clear and unambiguous contract between MLC and Mr Damevski as there was no signed agreement with MLC, and that MLC merely performed an administrative function by providing Mr Damevski with his pay.[8] The existence of the informal contract was shown by the use of Endoxos’ information and equipment and because Mr Damevski worked under the direction of a leading hand appointed by Endoxos. Mr Damevski worked in the same manner as he had previously, and an increase to his pay was negotiated with a representative of Endoxos.
[7] [2003] FCAFC 252.
[8] Per Marshall J at 91.
In Ormwave Pty Limited & Anor v Smith[9] the Supreme Court of NSW Court of Appeal held that in determining if contract has been formed it was not necessary to identify either a precise offer or a precise acceptance or a precise time at which an offer or acceptance occurred.[10]
[9] [2007] NSWCA 210.
[10] per Beazley JA at [68].
In Wilton & Cumberland v Coal & Allied Operations Pty Ltd[11] the issue was whether the applicants were the employees of Coal & Allied Operations Pty Ltd (CAO) or of Mining & Earthmoving Services Pty Ltd (MES). The employees were engaged by MES to conduct work on a site that was being mined by CAO. Justice Conti distinguishes the facts before him from those in Damevski because, among other things, there was no pre-existing contract between the employees and CAO and the employment relationship was not as a result of internally restructured employment arrangements.[12] The Secretary relied on this case, however it is readily distinguished from the facts before me as it is agreed that there was a pre-existing agreement in place between Mr Goodfellow and Silverbrook.
[11] [2007] FCA 725.
[12] at [32].
In McClusky v Karagiozis[13] Justice Merkel found that the express or implied consent of the employee to a transfer of their employment to a related entity is required.
[13] [2002] FCA 1137.
Shortly before the hearing of this matter, the Federal Circuit Court handed down its decision in Fair Work Ombudsman v Priority Matters Pty Ltd; Fair Work Ombudsman v Superlattice Solar Pty Ltd; Fair Work Ombudsman v Geneasys Pty Ltd; Fair Work Ombudsman v Kia Silverbrook; Fair Work Ombudsman v Mpowa Pty Ltd.[14] This is a series of actions by the Fair Work Ombudsman against Mr Silverbrook and companies with which he is associated for failures to meet obligations towards employees.
[14] [2016] FCCA 1474.
By way of background, Justice Street comments in relation to Priority Matters and Silverbrook:
[9] Priority Matters Pty Ltd was incorporated in 1994 and around 2010 took over the patent management that had formerly been performed by Silverbrook Research.
…
[11] At the time of the alleged contraventions Priority Matters had 15 employees.
…
[18] Silverbrook Research (In Liq) was started in 1994 and from around 2009 – 2012 had around 450 employees. This company was the subject of a change in name and winding up order on 16 April 2014. Most of the employees were taken over by the Memjet group which was formed in 2000 and became internationally established in 2001. Research and Development of the Memjet technology was being undertaken by Silverbrook Research.
…
[21] At the time of the alleged contraventions by Silverbrook there were 5 employees.
This case was about contravention of the Fair Work Act 2009 in circumstances where it was accepted without comment that specified companies employed specified employees. It was not in issue which employees were employed by each entity. The decision indicates employees of Priority Matters were patent attorneys[15] and employees of Silverbrook were clerks, mechanical engineers, a marketing manager and an accountant.[16] Justice Street does not refer to the individual circumstances of Mr Goodfellow’s case and Mr Goodfellow is not listed as an employee of either Silverbrook or of Priority Matters in this matter. As such, this case provides background to the corporate structure, but does not make any specific findings about Mr Goodfellow.
[15] at paragraph 200.
[16] at paragraph 238.
Mr Goodfellow had a contract with Silverbrook, and the starting point is an examination of the terms of his contract. If any doubt remains after examining the terms of the contract, features of an employment relationship relevant to the facts before me drawn and from the cases include which entity had the right to suspend or dismiss Mr Goodfellow, the right to exclusive services, the right to dictate the place and hours of work and the mode of remuneration.[17] If there is no existing contract in place,[18] or consent to a transfer to another entity is not expressly or impliedly provided by Mr Goodfellow[19] an examination may be made of whether in all the circumstances an agreement can be inferred.[20]
[17] Brodribb Sawmilling Co Pty Ltd.
[18] For example, because the exiting contract has been terminated as occurred in Damevski v Giudice.
[19] McClusky v Karagiozis.
[20] Brambles Holdings Pty Ltd.
THE CONTRACT OF SERVICE
Mr Goodfellow entered a contract of service with Silverbrook in 2003. This contract contains clauses that govern termination and variation of the contract.
Termination of the contract with Silverbrook
The service agreement sets the circumstances in which the contract between Mr Goodfellow and Silverbrook can be terminated. Clause 10 of this contract states:
10. Termination
10.1Goodfellow’s employment may be terminated by either party upon the giving of one (1) months notice in writing to the other. Silverbrook may make payment of the cash equivalent of one sixth of the Annual Salary exclusive of superannuation in lieu of notice.
10.2 Silverbrook may terminate this Agreement at any time:
(a)by not less than 2 months’ notice in writing if Goodfellow becomes incapacitated by illness or accident for an accumulated period of more than 3 months in any 12 month period; or
(b)by not less than 1 months’ notice in writing if Silverbrook or Goodfellow is advised by an independent medical officer that Goodfellow’s health had deteriorated to a degree that is advisable for Goodfellow no longer to be employed by Silverbrook.
10.3 Silverbrook may terminate this agreement immediately if Goodfellow:
(a)commits any act of dishonesty, fraud, wilful disobedience, misconduct or breach of duty;
(b)materially breaches this agreement and does not remedy this breach;
(c)commits any act of bankruptcy; or
(d)is of unsound mind or becomes liable to be dealt with under any law relating to mental health and in the reasonable opinion of Silverbrook, Goodfellow is likely to remain incapable of carrying out Goodfellow’s duties under this Agreement for a period in excess of one month.
10.4On termination of this Agreement, Goodfellow must return to Silverbrook all tangible property of Silverbrook including, but not limited to, all books, documents, papers, materials, portable telephones, computer hardware and software, computer disks, credit or charge cards, cars, keys and any other property (including copies, summaries and excerpts) belonging to or relating to the affairs or business of Silverbrook held by Goodfellow or under Goodfellow’s control.
10.5Goodfellow must not after the termination date represent himself as being in any way connected with or interested in the business of Silverbrook.
Variation of the Service Agreement
Mr Goodfellow relies on the terms of his service agreement with Silverbrook that address variation of the contract, in particular clauses 13.2 to 13.4 which state:
13.2Silverbrook may assign, novate or transfer any of its rights or/or obligations under this Agreement with Goodfellow’s prior consent which consent will not be unreasonably withheld.
13.3No right under this Agreement shall be deemed having been waived except by notice in writing signed by each party. Any failure to enforce any clause of this Agreement, or any forbearance, delay or indulgence granted by a party to the other party, will not be construed as a waiver of the firstmentioned party’s rights under this Agreement.
13.4 The provisions of the Agreement must not be varied, except by Agreement in writing signed by the parties.
THE EVIDENCE
Mr Goodfellow was first employed by Silverbrook in 2003 as a trainee patent attorney after being contacted by a recruiter and interviewed by Mr Silverbrook and Ms Lee. After qualifying as a patent attorney in 2005 he continued to work for Silverbrook. By early 2010, Silverbrook had eight patent attorneys and 25 support staff. Mr Goodfellow was paid by Priority Matters from at least July 2010.
In 2010 a need was identified for a patent portfolio manager to look after the allocation of the prosecution of patents. Mr Goodfellow took on this role, and while he continued to prosecute and draft patents, he added to these tasks managing the patent portfolio. He said the tasks involved were, for example, ensuring the same patent attorney was responsible for dealing with the same patent worldwide, whereas previously patent work had been allocated in a piece by piece approach. When he took on the management of the patent portfolio he renegotiated his salary. He provided an email dated 10 June 2010 that refers to a pay increase,[21] as well as payslips from Priority Matters showing an increase in pay between 16 July 2010 and 30 July 2010.[22] His increased role in managing the patent portfolio resulted in him having increased contact with Mr Silverbrook.
[21] Exhibit A2.
[22] Exhibits A3 and A4.
Around this time, Mr Silverbrook wanted to establish a company to offer external patent services, with the idea that Silverbrook would become an inventor consultant company. Priority Matters was to be the company that managed the patents. Mr Goodfellow said at the time this idea was being considered, the Patents Act was being amended, and he discovered that a firm that offered patent services was required to have a patent attorney as a partner. Once Mr Silverbrook was aware a patent attorney was required Mr Goodfellow said he did not hear anything further about this idea, and assumed this was because it was not palatable to Mr Silverbrook to have a patent attorney as a partner or as a director of a company.
Mr Goodfellow said he was aware in 2010 of a rumour that the staff were to be transferred to Priority Matters. He said that because under clause 13 of his contract with Silverbrook required his written consent for any transfer, he expected to receive either a request for his written consent to transfer him to Priority Matters or a new employment contract, but neither eventuated. He wanted to continue to be employed by Silverbrook rather than Priority Matters as Silverbrook had 13,000 patents worldwide, and he thought he was better off working for a company with a reputation in the area rather than for Priority Matters which was unknown.
The Secretary sought to make a connection between an email from Mr Goodfellow on 6 June 2012 regarding the salary of two patent attorneys who were later found by the Federal Circuit Court to be employees of Priority Matters and Mr Goodfellow’s management of these patent attorneys. Mr Goodfellow says he was responsible for managing information but not people, and that in this email he was merely conveying the salary proposals from other staff as requested by Mr Silverbrook.
Priority Matters issued Mr Goodfellow’s payslips. This is reflected in his bank account statements, which records transfers “from MTK Accounting S Priority Wages”.[23] Mr Goodfellow’s wages are recorded in the entitlement balance ledger of Priority Matters.[24]
[23] Exhibit B1 p 69 – 88.
[24] Exhibit B1 p156.
On being asked if he was aware of the intention to move the patent function to Priority Matters in 2010, Mr Goodfellow said he did understand that was the intention, but also thought any transfer to Priority Matters would need to be formalised under his contract. He acknowledged that he knew he was being paid by Priority Matters as shown by his payslips, and his PAYE payment summary was issued by Priority Matters.
Mr Goodfellow said he understood from his communications with Mr Silverbrook that he was considered an employee of Silverbrook.
In October 2010, Mr Goodfellow was refinancing his home and the bank required documentation that linked Silverbrook, listed as his employer, with Priority Matters who issued his payslips. Mr Goodfellow emailed Ms Jemima Harris, Corporate Counsel for Silverbrook, on 27 October 2010 requesting a document to show this link. Ms Harris replied stating she had prepared a draft Certificate of Employment and asking if this had the information he required. This document, entitled “Certificate of Employment” states Mr Goodfellow was employed by Silverbrook from 10 November 2003 until 26 March 2010, and from 29 March 2010 was transferred to Priority Matters in the same position. Mr Goodfellow replied that the letter was perfect, and requested a signed copy.
Mr Goodfellow said this letter was for the purpose of refinancing his loan. He did not request a Certificate of Employment, but what was provided was sufficient for his purposes. He said he did not query or dispute the content because of his employment contract with Silverbrook that any waiver or forbearance on his part did not constitute a waiver of any other rights under the agreement.
Mr Goodfellow said that at the time his employment is said to have transferred to Priority Matters he had the same equipment, the same premises, the same email domain, and his direct supervisor had not changed, and as a result he had no reason to think he had been transferred to Priority Matters. He was expecting a transfer to Priority Matters to be formalised by seeking his consent in writing to vary his existing contract with Silverbrook or by a new contract.
Mr Goodfellow provided a notice from IP Australia dated 22 May 2013 regarding annual Patent Attorney registration fees, showing his employer as Silverbrook Research Pty Ltd,[25] and a registration form for a seminar on 18 May 2010 showing his firm as Silverbrook Research,[26] a travel request form on Silverbrook Research Pty Ltd letterhead[27] and emails regarding his laptop to desktop support at Silverbrook.[28]
[25] Exhibit A1 p32.
[26] Exhibit A1 p12.
[27] Exhibit A1 p17.
[28] p18 – 22.
The expense claim relating to payment of the annual registration fees is claimed on a staff expense claim form headed “Silverbrook Research Pty Ltd.”[29] His email address remained “[email protected]” as at 13 January 2013.[30]
[29] Exhibit A1 p29.
[30] Exhibit A1 p30-31.
In 2012 the Kaiser Foundation, an investor in Silverbrook, made an attempt to gain control of Silverbrook’s intellectual property, in particular the Memjet technology which had 6,000 patents. The Kaiser Foundation sued Silverbrook for fraud and the matter settled, however this resulted in employees not being paid. The Memjet technology patents were transferred out of Silverbrook as part of the settlement. This was a large part of the patents owned by Silverbrook.
As a result of the settlement and transfer of the Memjet patents, Mr Goodfellow’s job went from managing the patent portfolio to packaging remaining patents for sale, as this was the means by which he thought he could be paid the wages he was owed. Mr Goodfellow said he continued to work without payment for over a six months before he was told in April 2013 there was no money. He started looking for other work in May 2013 and found another job in New Zealand. He resigned from Silverbrook on 28 October 2013, and in his letter of resignation agreed to act as a consultant for the sale of patents if he was paid in advance AUD 500 plus GST per hour. In an email dated 8 November 2013 to Mr Silverbrook, Mr Goodfellow states it is agreed that he will retain Silverbrook infrastructure and equipment, as well as his email account and system access to assist him carry out any consultancy work.
Mr Goodfellow’s letter of resignation dated 28 October 2013[31] is directed to Mr Silverbrook, Managing Director of Silverbrook Research Pty Ltd. A further email from Mr Goodfellow dated 8 November 2013 refers to the lack of payment of wages and entitlements due on termination “during my almost 10 years of service for Silverbrook Research.”[32]
[31] Exhibit B2 p103.
[32] Exhibit B1 p158.
The Fair Work Ombudsman identified Mr Goodfellow as an employee of Priority Matters, and in an email dated 12 November 2013 invited him to participate in proceedings against Priority Matters.[33] In his reply dated 21 November 2013, Mr Goodfellow says he was employed by Silverbrook Research and had not signed an employment contract with Priority Matters. [34] He goes on to state he expects this is the case for most, if not all, other employees.
[33] Exhibit B1 p224.
[34] Exhibit B1 p224.
APPLICANT’S CONTENTION
Mr Goodfellow contends that the only change to his employment that he noted over time was that his payslips were issued by Priority Matters from early 2010. As he had not received a request for written consent to vary his contract as required by his employment contract, he thought it was only a matter of time before he received a new employment contract. He believed he continued to be an employee of Silverbrook.
RESPONDENT’S CONTENTION
The Secretary contends that Mr Goodfellow had a tacit agreement that his employment was transferred to Priority Matters and that this is shown by his payslips, PAYG payment summary and the Certificate of Employment. The Secretary also relies on Mr Goodfellow’s knowledge of Mr Silverbrook’s intention to transfer employees to Priority Matters, and his failure to raise any concerns with this arrangement.
CONSIDERATION
Mr Goodfellow had a contract with Silverbrook that addresses the terms and conditions of his employment. It follows that unless there is a joint employment arrangement, which is not suggested by either party, for Mr Goodfellow to be an employee of Priority Matters, his contract with Silverbrook must be terminated and a new contract entered with Priority Matters, or the contract with Silverbrook must be varied to substitute Priority Matters as his employer.
There is no evidence that a notice of termination of Mr Goodfellow’s employment was provided by Mr Goodfellow or Silverbrook under cl.10.1 of the contract of service at any time before Mr Goodfellow’s resignation on 28 October 2013. There is no evidence that a ground for termination under cl.10.2 or 10.3 of the contract existed.
Mr Goodfellow retained equipment belonging to Silverbrook, used the Silverbrook email domain, and held himself out as an employee of Silverbrook to attend a conference and in renewing his professional registration. This is not consistent with termination of the contract, in particular clauses 10.4 and 10.5. When he retained this equipment after his resignation, the use of this equipment was specifically addressed in the terms of a subsequent consultancy agreement.
If the business of the employer is transferred to another entity, this amounts to termination of the employment contract, and the termination will be wrongful unless appropriate notice is given under the contract.[35] This will give rise to an obligation to pay redundancy payments. In this case no redundancy payments were made. There is little information to show that the business of Silverbrook was transferred to Priority Matters, or that the particular functions Mr Goodfellow performed in first managing the patent portfolio and then packaging patents for sale were transferred to Priority Matters.
[35] Burton v Litton Business Systems (1977) SASR 162.
Having considered the evidence before me and the terms of the contract, I am not satisfied that Mr Goodfellow’s contract with Silverbrook was terminated before he resigned on 28 October 2013.
I have also considered whether the contract has been varied. A contract of service is a personal contract between the employee and the employer, and I doubt it can be varied in such a way as to change the identity of a party to the contract. Even if this were possible, it would require the consent of the parties. Mr Goodfellow states, and I accept, that he did not consent to a transfer. While Mr Goodfellow accepted wages, a PAYG payment summary and a Certificate of Employment from Priority Matters, I do not consider this is sufficient to show an implied consent to a transfer in light of other factors favouring his continued employment with Silverbrook.
The Secretary sought to draw a connection between an informal agreement between Mr Silverbrook and Mr Goodfellow to increase Mr Goodfellow’s salary, and an informal arrangement to change the identity of Mr Goodfellow’s employer. In my view a fundamental change to the contract to change the identity of a party cannot be equated with salary negotiations.
As a result, I am not satisfied that there was any express or implied variation to the employment contract so that Mr Goodfellow became an employee of Priority Matters.
Mr Goodfellow’s contract of service was not terminated before his resignation on 28 October 2013 or varied to change his employer from Silverbrook to Priority Matters. While this is sufficient to make a decision on this matter, in the event that this is incorrect, I have also considered other features of Mr Goodfellow’s employment relationship with Silverbrook and Priority Matters.
In cross examination, the Secretary sought to elicit further evidence as to Mr Goodfellow’s understanding of Mr Silverbrook’s plans to transfer employees to Priority Matters. Even at its highest, I do not consider that an understanding that this was what Mr Silverbrook intended at one point in time shows it continued to be Mr Silverbrook’s intention, or that this intention was carried out.
In looking to the broader factual matrix, relevant indicators are the terms of the employment contract, who had the right to suspend or dismiss Mr Goodfellow, and who dictated his place of work and hours of work, as well as the use of equipment and payment of fees for professional registration. Also relevant are to which entity specified the work Mr Goodfellow was to undertake and any particular requirements of that work.
Mr Goodfellow continued to use equipment owned by Silverbrook, and to be subject to the direction of Mr Silverbrook. He held himself out to others, such as his professional association, as an employee of Silverbrook.
The right to suspend or dismiss is not determinative in this case as Mr Silverbrook and Ms Lee were directors of both Silverbrook and Priority Matters, and had the right to suspend or dismiss Mr Goodfellow. Mr Goodfellow’s work was assigned by Mr Silverbrook, who was a director of both entities.
Mr Goodfellow worked from home following a written variation to his employment contract dated 19 January 2006 allowing him to do so.[36] His place of employment did not change after the purported transfer of his employment on 29 March 2010. Mr Goodfellow requested leave through the human resource system and either Mr Silverbrook or Ms Lee approved his leave both before and after 29 March 2010.
[36] Exhibit B2 p152-153.
Mr Goodfellow was paid by Priority Matters, and his payslips reflect this arrangement. Priority Matters issued his PAYG payment summary. While the identification of the person who pays the wages is an indication of an employment relationship, it is not the only indication and I do not regard it as determinative in this case. I am not satisfied that Mr Goodfellow’s acceptance of a Certificate of Employment stating Priority Matters was his employer for the purpose of refinancing his loan shows he was, in fact, employed by Priority Matters.
Mr Goodfellow continued to act as if he were employed by Silverbrook after the Certificate of Employment was issued. He declined to participate in proceedings by the Fair Work Ombudsman as an employee of Priority Matters. His letter of resignation was directed to Silverbrook. He continued to hold equipment owned by Silverbrook, and Silverbrook paid his travel expenses and reimbursed the costs of his registration as a patent attorney after the date of the purported transfer to Priority Matters. He attended a conference as an employee of Silverbrook after this date.
CONCLUSION
Mr Goodfellow was an employee of Silverbrook from the commencement of his employment in 2003 until the date he resigned from this position on 28 October 2013. An insolvency event as defined in the Act occurred in relation to Silverbrook on 16 April 2014. It follows that he was an employee of Silverbrook less than 6 months before the appointment of an insolvency practitioner to Silverbrook, he meets subsections 10(1)(a), (b) and (c) of the Act. As a result he is eligible for an advance.
The decision of the Secretary is set aside and in substitution it is decided that Mr Goodfellow is eligible for an advance under s 10 of the Fair Entitlements Guarantee Act 2012.
I certify that the preceding 63 (sixty -three) paragraphs are a true copy of the reasons for the decision herein of Member K Millar ........................................................................
Administrative Assistant
Dated 17 August 2016
Date(s) of hearing 27 June 2016 Applicant In person Advocate for the Respondent Cain Sibley Solicitors for the Respondent Clayton Utz
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