Ian Horgan v Asia Pacific International College Pty Ltd

[2015] FWC 261

[2015] FWC 261

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Ian Horgan
v
Asia Pacific International College Pty Ltd
(U2014/13049)

COMMISSIONER GREGORY MELBOURNE, 25 MAY 2015

Jurisdictional objection dismissed - Minimum Employment Period - Small Business.

Introduction

[1] Mr Ian Horgan was employed by Asia Pacific International College Pty Ltd (“Asia Pacific”) in March 2014. However, on 5 October, six and a half months later, he was dismissed from his employment, and subsequently proceeded to make an unfair dismissal application.

[2] Asia Pacific submits at the time Mr Horgan was dismissed it was a “small business employer” as defined in the Fair Work Act 2009, being an employer who employs less than 15 employees. The Act continues to provide the minimum employment period that must be completed before an employee in a “small business” can bring an unfair dismissal claim is 12 months. Asia Pacific accordingly submits Mr Horgan is precluded from making an unfair dismissal application.

[3] This decision deals with that jurisdictional objection.

[4] Mr Horgan appeared on his own behalf. Asia Pacific was represented by the Principal of the College, Professor Ali Jaafari.

The Issue to be Determined

[5] Section 382 of the Fair Work Act 2009 (Cth) (“the Act”) provides that a person is protected from unfair dismissal at a time if the person is “an employee who has completed a period of employment with his or her employer of at least the minimum employment period.” 1

[6] Section 383 continues to provide the “minimum employment period,” if the employer is a “small business employer,” is one year. 2

[7] Section 23 sets out the meaning of “small business employer.” It states:

“(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.

(2) For the purpose of calculating the number of employees employed by the employer at a particular time:

(a) subject to paragraph (b), all employees employed by the employer at that time are to be counted; and

(b) a casual employee is not to be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis.

(3) For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.

(4) To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee’s employment, the employees that are to be counted include (subject to paragraph (2)(b)):

(a) the employee who is being dismissed or whose employment is being terminated; and

(b) any other employee of the employer who is also being dismissed or whose employment is also being terminated.” 3

[8] Section 12 of the Act also indicates that “associated entity has the meaning given by section 50AAA of the Corporations Act 2001.” 4

[9] Therefore, was Asia Pacific a “small business employer” at the time it dismissed Mr Horgan in October last year.

The Evidence and Submissions

[10] Both parties provided limited written and oral submissions in the proceedings and neither provided sworn witness statements. Both declined the opportunity to provide further sworn evidence from the witness box, and neither sought to cross examine the other.

[11] Asia Pacific indicated it is an educational institution that operates as an independent entity with its own Board of Management, although its shares are owned and controlled by another entity.

[12] It indicated Mr Horgan commenced employment with Asia Pacific on 24 March 2014 as a Program Coordinator, employed on a full-time basis. He was subsequently terminated on 5 October 2014. It submits at this time it had 13 employees, being eight full-time employees, including Mr Horgan, as well as five casual employees. Its submissions included a list of the names of these employees.

[13] It accordingly submits it was a “small business employer,” as defined by the Fair Work Act 2009, at the time of Mr Horgan’s termination and therefore he had not completed the required minimum employment period at the time to enable him to be a person protected from being unfairly dismissed.

[14] Its submissions also set out the definition of “associated entity” in s. 50AAA of the Corporations Act 2001. It continued to submit that the determination of whether an entity is an associated entity is a question of fact and should be determined based on the evidence before the Commission. It made reference to a number of points in support of the submission it is an independent entity, rather than an associated entity. These included:

• Asia Pacific is an independent registered entity governed by its own Board of Directors. It submits the majority of those Board members are external to it and are not shareholders.



• It has its own President or Principal Executive Officer with full authority to run the business and answerable to the Board of Directors.



• It has its own ABN and ACN and compiles its own annual accounts for auditing and taxation purposes.



• It submits Asia Pacific is not legally controlled by any other entity and is directly responsible for all statutory employer obligations as an employer. It submits it employs staff directly. It also submits it “employs a number of contractors for specific services under a fee for service contract; all of these are on a casual and sessional basis and none is a full-time engagement. Most of the contractors are engaged with income earning activities outside the College, e.g. consulting, training, etc.” 5

[15] Asia Pacific also provided a copy of what was indicated to be “The Constitution of Asia Pacific International College Pty Ltd A.C.N. 061 101 488.” 6

[16] Professor Jaafari also indicated in his oral submissions that Asia Pacific’s shares are owned by another entity, but it is a totally independent organisation operating under the direction of its own Board of Directors. He initially submitted that its shareholder is not represented on the Board although, in response to submissions made by Mr Horgan, subsequently indicated that Mr Rupesh Singh “may have been on the board but the board, the majority of the board are external to shareholders and therefore the decision making power under the Corporations Law rests with the Board of Directors...” 7 He also indicated the parent company provides some services to Asia Pacific, but they are “non-core services” and obtained on a fee-for-service basis.

[17] Professor Jaafari also submits Asia Pacific refutes Mr Horgan’s submissions about some individuals being employees, rather than contractors, and submits it makes a distinction between employees and contractors based on the nature of the relationship being entered into.

[18] He also indicated Mr Horgan was engaged as an employee rather than a contractor because his position involved full-time work as a program coordinator at the Melbourne campus. Asia Pacific accordingly decided it was more appropriate for him to be engaged as an employee, instead of an independent contractor, as this reflected the nature of the relationship between Asia Pacific and Mr Horgan.

[19] Mr Horgan indicated he was dismissed on 5 October 2014 and submits at the time of his dismissal Asia Pacific had more than a 15 employees. He accordingly submits he is entitled to make an unfair dismissal application having completed the minimum employment period.

[20] Mr Horgan referred to the list of thirteen named employees provided by Asia Pacific, but indicated he could identify at least four additional employees that should be added to that list, including two other lecturers, Leanda Care and Paul Steinfort, and the Campus Director, Fernando Scarmozzino, and Support Services Manager, Ms Helen Lampp. In his submission a number of other individuals could also be considered to be working as employees and should be added to the list of Asia Pacific employees.

[21] Mr Horgan also made reference to an Asia-Pacific International College School of Business and Project Management Organisational Chart, provided to him at the time he was employed, which lists a range of employees including “at least fifteen high level appointments.” 8

[22] Mr Horgan also submits other individuals, who could be considered to be employees, had been engaged as contractors and chose to be “probably for tax reasons.” 9 He submits that many faculty members are, in fact, employees again confirming Asia Pacific had more than 15 employees at the time he was dismissed. He also submits he was offered the opportunity to be engaged as a contractor at the time he was employed, and understood similar choices were provided to other individuals.

[23] Mr Horgan also submits Asia Pacific gives employees a choice of being an employee or independent contractor, however, in reality those engaged as independent contractors have no control over the work they perform, and all classes are taught and scheduled on dates and times established by Asia Pacific, using material supplied by it. Individuals bear no financial risk and, in his submission, faculty members should be considered to be employees. However, he also acknowledged in answer to a question from the Commission that many of these individuals do teach elsewhere, and are engaged by other colleges and universities.

[24] Mr Horgan also submits Asia Pacific receives a shared service from its parent company, Education Centre of Australia, owned by Mr Rupesh Singh, and it should be considered under the Corporations Act to be a related body. He also submits Asia Pacific is a related body of ECA using its shared services to contain costs, and it markets the benefits of its relationship with ECA to its students. In addition, he submits students interested in Asia Pacific courses are directed to contact the ECA staff on the Asia Pacific website.

[25] In response to a question from the Commission he also stated he believed ECA is a 100% shareholder in Asia Pacific and this was made evident in documents obtained from ASIC. He also stated that the owner of ECA, Mr Singh, is also a director of Asia Pacific.

Consideration

[26] As indicated at the outset both parties provided limited submissions and little evidence in support of their respective positions in this matter. Asia Pacific has raised the jurisdictional objection that Mr Horgan had not completed the “minimum employment period” at the time of his dismissal because it came within the definition of a “small business employer,” having only 13 employees at the time. It submits other individuals providing services to the organisation were engaged as independent contractors, rather than employees. However, it provided no evidence about the nature of these arrangements, or the contractual documentation that supports them.

[27] Asia Pacific also rejects the submission by Mr Horgan that it is not an independent entity because it is effectively controlled by its shareholder organisation.

[28] The submissions provided by Mr Horgan confirm the list of 13 employees referred to by Asia Pacific in its submissions. Mr Horgan also submits at least 4 additional employees can be added to this list. He also submits an organisational chart provided to him at the time he was employed indicates Asia Pacific also had a number of other employees at the time of his dismissal, in addition to those listed. The submissions provided by Asia Pacific did not specifically take issue with those made by Mr Horgan about these additional employees.

[29] Based on the limited submissions and evidence before the Commission in this matter I am satisfied Asia Pacific was not, at the time Mr Horgan was dismissed a “small business employer, being an employer with less than fifteen employees.” Mr Horgan was therefore a person at the time of his dismissal who is protected from unfair dismissal, having been employed for a period of more than 6 months as required by s.383 of the Act. The application will accordingly now be relisted to deal with Mr Horgan’s unfair dismissal application, with directions to be issued for the filing and service of evidence and submissions.

COMMISSIONER

Appearances:

Mr Ian Horgan appeared on his own behalf.

Professor Ali Jaafari appeared on behalf of the Respondent.

Hearing details:

2014.

Melbourne:

12 December.

 1   Fair Work Act 2009 (Cth) at s.382(a)

 2 Ibid at s.383(b)

 3   Ibid at s.23

 4 Ibid at s.12

 5   Submissions of the Respondent at para 13

 6   Submissions of the Respondent, as attachment

 7   Transcript at PN58

 8   Ian Horgan - Statements of Fact at para 32

 9   Ibid at para 6.2

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