Gregory McDonald v Super Butcher Australia Pty Ltd

[2013] FWC 985

[2013] FWC 985

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Gregory McDonald
v
Super Butcher Australia Pty Ltd
(U2012/12645)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 14 FEBRUARY 2013

Summary - jurisdictional objection - whether employee employed by Respondent - liquidation - business sale agreement - whether contract of employment formed.

[1] Mr Gregory George McDonald (“the Applicant”) on 21 August 2012 made application under section 394 of the Fair Work Act 2009 (“the Act”) seeking an unfair dismissal remedy in relation to his dismissal by Super Butcher Australia Pty Ltd (“the Respondent”).

[2] The application was subject to a jurisdictional hearing (on 23 November 2012) (“the prior hearing”) in relation to whether or not the Applicant’s application had met the requirements of section 394(2) of the Act. I found that it did, and subsequently issued a decision on 27 November 2012 to that end.

[3] However, a further jurisdictional objection was raised, and that concerned whether the Applicant was dismissed for reason of a genuine redundancy, within the Act’s meaning. Upon the hearing of this matter however it became evident that the issue was not around a redundancy as such, but rather as to whether or not the Applicant had at any time been an employee of the Respondent. Of course, if this latter circumstance was made out, the application could not proceed because of the operation of s.385(a) of the Act in conjunction with section 386 (1)(a) of the Act. The effect of these sections is that an employee cannot be unfairly dismissed if the employee has not been dismissed from the employment at the initiative of his or her employer.

Background

[4] Put concisely, it appears that in late April 2012 the then directors of the Respondent made application under s.436B of the Corporations Act 2001 voluntarily to appoint administrators to take control of the Applicant’s former employer’s affairs pending the meeting of creditors, which in the ordinary way would determine the Company’s future. It seems around the time of the first creditors’ meeting a proposal was considered. This appears to have taken place around late June 2012.

[5] The second creditors’ meeting, however, had the effect of rejecting that proposal and appointing a liquidator in place of the former administrator. This occurred on or about 5 July 2012. Following the appointment of the liquidator, the liquidator agreed to sell the assets and the business to the Respondent.

[6] The terms and conditions of the business sale agreement were put into evidence. The business sale agreement was executed on 10 July 2012, though the completion date was varied by informal agreement between the liquidator and the Respondent. It appears as though in an effort to keep the business running during the sale process, the liquidator permitted the Company to have access to the business premises (on or about 11 July 2012) in the period prior to the completion of the contract.

[7] The unchallenged evidence before me was that the contract was eventually completed in the period between 25 July 2012 and 30 July 2012, at which time the Respondent took full control of the assets and business from the liquidator.

[8] Much of this factual background was unknown to the Applicant. He came to form views about his employment status from other circumstances. I will set some of these circumstances out in the following discussion.

[9] On 29 June 2012 the Applicant received an email representing the views of the then Administrator (who was subsequently displaced by a new liquidator as mentioned earlier) indicating that he (along with all the employees) would be employed with the new owner (the Respondent).

[10] The Applicant left the country at around this time, but became aware before or upon his return that the circumstances had changed. Despite this, the Applicant held to the view that he had been re-employed by the Respondent, or else his employment had seamlessly transferred to the Respondent, so that the Respondent was his new employer.

[11] The Applicant noted - and it appears to be accepted by the Respondent - that he had received two or three payslips under the name of the Respondent, and that this was indicative of the Respondent having assumed the status of his legal employer (by some means or another).

[12] The Applicant claimed that he attended work on 23 July 2012 for the first time since his departure overseas on 29 June 2012 (or thereabouts). On his first day back at work, the Applicant, along with his sister who was also an employee of the Respondent (in the role of the purchasing officer), was invited to the board room by Mr Mark Dale, who is a director of the Respondent.

[13] The Applicant gave evidence that Mr Dale said that the Applicant’s services were no longer required (along with those of his sister).

[14] The Applicant questioned the situation and stated that Mr Dale said, “The business is too top-heavy and we need to get rid of 18 people.”

[15] The Applicant’s sister was said by the Applicant to have replied, “Yes I know we [are top-heavy] but you do not get rid of people who are contributing financially to the income of the Company.” The Applicant's sister’s direct evidence was to the same effort.

[16] It appears that some 18 employees (out of a total of 138 employees) were treated in a similar way by the Respondent at or about that time. The Respondent’s evidence was that the business was losing some $30,000 or so per week and that the salary bill had to be adjusted as a consequence. The Respondent was simply of the view, it claimed, that the skills of the Applicant were not essential to the operation of the business at the time.

Was the Applicant an employee of the Respondent?

[17] It does not appear to me that there is any discernible instrument by and through which the Applicant can be said to have become an employee of the Respondent.

[18] Short of re-establishing the master slave relationship, there must be some vehicle by which the Applicant and the Respondent had formed a contract of employment.

[19] The business sale agreement stipulates that a transferring employee means an employee who accepts the offer of employment made by the Respondent under clause 9.2 of the business sale agreement. Clauses 9.1 and 9.2 provide that:

9.1 The Purchaser (the Respondent) must notify the vendors in writing prior to the completion date of the names of the employees of the vendors who the purchaser proposes to employ.

9.2 the purchaser must offer each employee whose name is notified of the purposes of clause 9.1 employment in the business with the purchaser as follows:

(1) the offer must be conditional on completion;

(2) the offer must be on terms no less favourable than the employees existing terms of employment:

(3) the employment offered must commence on the completion date and recognise the employee’s continuity of service: and

The offer must require the employee to resign from employment with the vendors if the employee accepts employment with the purchaser and if the completion also occurs.

[20] Clause 9.3 of the business sale agreement states that the vendors are responsible for any redundancy payments that each employee who does not accept the purchaser’s offer of employment.

[21] The Applicant has no evidence of being presented with any offer of employment by the Respondent. He makes no effort to agitate that such an offer was made. As stated above, the Applicant’s position is that he has assumed that his employment was continuous over the course of the period of administration, liquidation and the completion of the business sale agreement.

[22] Regrettably, for the Applicant’s part, such continuity is not founded on the evidence.

[23] The commercial contract between the vendors and the Respondent makes it clear that there must be an offer of employment on the basis of particular considerations, and which required the express acceptance - subject to particular conditions - by an employee (for that employee to become a “transferring employee” under the contract).

[24] The Respondent’s evidence supports this conclusion. It was put, and went unchallenged, that the Respondent made written offers to some 120 persons, and that no such written offers were made to the residual 18 persons, which included the Applicant. No legal relationship, therefore, between the Applicant and the Respondent came into existence.

[25] To be sure, there are aspects of this process which have caused confusion on the Applicant’s part.

[26] The circumstances that have informed the Applicant’s judgement included the following: the Applicant was under the impression (at 29 June 2012) his employment would be maintained with the Respondent; he was absent from the country for the period thereafter when his former employer was moved into liquidation on the vote of the second creditors’ meeting on 5 July 2012; he had been an employee of some seven years standing up until that time and was one of the more senior members of his former employer’s staff and believed he may have been involved in the liquidator’s or Respondent’s decision making; and, he had received his most recent pays under the letterhead of the Respondent.

[27] In respect of this final matter, the Respondent contended as a matter of submission that there were procedural irregularities over the course of the rushed period between 5 July and 24 July 2012 during which time the liquidator permitted the Respondent to move into the establishment in order to ensure the business continuity was not disrupted any more than it had been. This meant on some occasions the Respondent utilised its own payroll processing facilities (as the liquidator had stepped back from its day to day control of the business affairs of the former entities).

[28] The Respondent contends that the use of its payslips was not an indicator of an employment relationship or contract of employment having been formed between the Applicant and the Respondent, but simply an expression of a particular exigency arising from the liquidation and the sale process. I accept this to be so. I add to this the fact that the certificate of separation provided to the Applicant was signed by the liquidator attest to the continuing role of the liquidator during the period prior to the completion of the business sale agreement.

[29] Despite the Applicant claiming that he was dismissed by the Respondent, the Applicant gave evidence that he had taken legal advice and had been encouraged to make application to GEERS. That application (on the Applicant’s evidence) appears to be somewhat advanced with the Applicant indicating he had been told to expect to receive a cheque at some point in the near future upon finalisation of his claim.

[30] This, of course, would not be an outcome that would be consistent with the Applicant having been dismissed at the initiative of the Respondent.

[31] The Applicant is also aggrieved for reasons that after seven years of employment with his former employer he was dealt with in a brusque and hurried manner when he was directed to leave the premises on 23 July 2012. The Applicant is also of the view that he did not come to be a “transferring employee” because he was related to the previous Director. In all, the Applicant believes that he was treated harshly and unfairly.

[32] Be this as it may, the Applicant’s grievances in these respects do not add to his case as to whether or not a contractual or legal relationship had been formed between him and the Respondent.

[33] In my view, the Respondent was bound by the business sale agreement and absent any offer of employment to the Applicant, the Applicant could never have become one of its employees (or a “transferring employee”). When the Applicant was told at the meeting of 23 July 2012 that “you’ll no longer be needed” (which was the evidence he led), the Applicant was informed that he was not an employee who was to become a transferring employee and that no offer of employment would be made to him.

[34] As a consequence, I conclude that the Applicant was at no time an employee of the Respondent. And because of this, the Applicant is unable to make an application under s.394 of the Act because though he was dismissed at the initiative of his employer, the Respondent was not that employer.

[35] The application is therefore dismissed.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr G. McDonald, Applicant

Mr O. Wurth, for the Respondent

Hearing details:

2013.

11 February.

Final written submissions:

2013.

6 February.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR534028>