Karen Wilson v AMN Challenge Pty Ltd T/A AMN Challenge

[2018] FWC 2924

[2018] FWC 2924

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Karen Wilson
v
AMN Challenge Pty Ltd T/A AMN Challenge
(U2018/1608)

COMMISSIONER SIMPSON BRISBANE, 23 MAY 2018

Application for unfair dismissal remedy – jurisdictional objection – minimum employment period – whether entities associated entities – whether there was a transfer of business – jurisdictional objection upheld – application dismissed

[1] This matter concerns an application pursuant to s.394 of the Fair Work Act 2009 (the Act) by Ms Karen Wilson who alleges that the termination of her employment from AMN Challenge Pty Ltd T/A AMN Challenge (AMN) was unfair.

[2] Ms Wilson filed her application with the Fair Work Commission (the Commission) on 19 February 2018. AMN filed a form F4 Objection to unfair dismissal application on 13 April 2018 where it raised a jurisdictional objection on the basis Ms Karen Wilson did not meet the minimum employment period required under section 383 of the Act, being six months for a small business employer.

[3] AMN submitted Ms Wilson was previously employed by Combined Communications Group Ply Ltd (CCG) A.C.N. 618 417 888 which was placed into administration in late 2017. Subsequent to CCG going into administration (but before its liquidation) Ms Wilson was employed by AMN on or about 3 December 2017.

[4] AMN submitted Ms Wilson was terminated by AMN on 2 February 2018, which was three months from the date of commencement of her employment with AMN. It submitted that CCG and AMN are independent and separate entities that perform different functions, and that the employment of Ms Wilson cannot be characterised as continuous service under section 382 of the FWA because the two entities are not "associated entities" or "related bodies corporate" as defined by the FWA or Section 50 of the Corporations Act 2001 (Cth).

[5] AMN further submitted that there has been no transfer of business from CCG to AMN. There is no connection between CCG and AMN except for Mr Steve Loftus being the director and a shareholder of both companies.

[6] On 17 April 2018 the Commission issued directions for the parties to file material in relation to the jurisdictional objection. Both parties filed submissions and the matter was listed for a Jurisdiction Hearing on Monday 14 May 2018 in Brisbane.

[7] Ms Wilson was represented by Ms Melissa Demarco of Demarco Law and AMN was represented by Mr Christian Moore of Aejis Legal.

[8] On 10 May 2018 Ms Wilson sought an order for the production of documents from AMN relating to her employment with AMN including payslips, contracts and performance reviews, and other documents evidencing the reason for her termination. AMN said it produced documents within its control but submitted some documents could not be produced as when CCG went into administration and then liquidation they were surrendered to the administrator and subsequent liquidator of CCG. Ms Demarco confirmed she agreed to the hearing proceeding to determination on the basis of the material produced.

BACKGROUND

Commencement of Employment 27 June 2016

[9] AMN was incorporated on 3 May 2016 and is engaged in the business of the supply of broadband and telecommunication services. An unsigned employment contract attached to the statement of Ms Wilson states that Ms Wilson would commence employment with AMN on 27 June 2016 which she says she did. The contract describes her position as ‘Finance Office’ paid at $26 per hour. A payslip provided by Ms Wilson for her initial week of employment records a title of ‘Office Administrator’ and indicates she worked 30 hours and accrued annual leave. The employment contract also notes she would accrue leave indicating the role was a permanent position.

Incorporation of CCG 6 April 2017

[10] AMN submits that on 6 April 2017 CCG was incorporated and was engaged in the business of providing contracting services. Mr Stephen John Loftus was the sole director and secretary of both AMN and CCG. I also note from the ASIC Extracts for both AMN and CCG that they share a common Principal Place of Business which is the address provided for Mr Loftus as sole Director and a Shareholder in both entities. The ASIC Extract for CCG sets out that the shares in CCG are equally split between Mr Loftus and 608 636 639 Cosl Investments Pty Ltd.

Promotion of Ms Wilson with AMN 16 April 2017

[11] Ms Wilson says that on 16 April 2017 she was promoted to the position of Business Manager with AMN and her remuneration was increased to $65,205 per annum. Ms Wilson said she held that position until she was terminated by AMN (on 2 February 2018).

Ms Wilson Commences work with CCG 1 June 2017

[12] Ms Wilson said that on or about 1 June 2017 she began performing additional duties on behalf of CCG however continued performing work for AMN. Ms Wilson said due to the additional duties she was performing for both companies, her remuneration was increased to $74,464.00 per annum.

Contact of employment with CCG

[13] Attached to the statement of Ms Wilson is a signed copy of an employment contract between CCG and Ms Wilson dated 1 June 2017. The employment contract includes the following at clause 3.

“PROBATION

3.1 Your employment is probationary for the first three (3) months of employment with the employer.

3.2 During the probation period, your employment may be terminated with one weeks’ notice by either party, or payment in lieu of such notice.

3.3 The Employer may, at its discretion, extend the period of probation.”

[14] A new employer can choose not to recognise service of an employee with an old employer where there has been a transfer of business where the new employer informs the new employee in writing before the new employment commences in accordance with s.384(2)(b)(iii) and in those circumstances the period of service with the old employer does not count towards the employees period of employment with the new employer for the purposes of the unfair dismissal provisions.

[15] However the provision only applies where the old and new employer are not associated entities. Despite AMN arguing the two businesses were not associated entities, the point was never raised for AMN in submissions. For reasons I deal with below it is my view that AMN and CCG were associated entities as at June 2017 and therefore AMN would have been unable to rely on this clause to invoke s384(2)(b)(iii) concerning Ms Wilson’s initial period of service with AMN.

[16] A schedule to the contract between Ms Wilson and CCG provided that her position was ‘Business Manager’ commencing on 1 June 2017, and she would be paid $74,464.00 per annum.

[17] Ms Wilson noted that the words AMN Challenge Pty Ltd appeared as at the bottom of each page of the contract.

CCG goes into administration

[18] Ms Wilson submitted that on or about 13 November 2017 CCG was placed into voluntary administration. AMN submits that CCG was put into administration pursuant to s.436 of the Corporations Act2001. AMN provided with its written submission a copy of a statutory report by a liquidator to creditors on CCG dated 12 February 2018.

[19] On 19 April 2018 the Commission was provided with a copy of correspondence 1 from the Liquidator of CCG Glen Oldham, stating that he advised he was appointed Administrator of the Company on 13 November 2017 and subsequently appointed as Liquidator on 11 December 2017 by Order of the Supreme Court of Queensland. The letter included the following;

“Dear Sir/Madam,

RE: Combined Communications Group Pty Ltd (In Liquidation)

ACN 618 417 888 (“the Company”)

U2018/1608 – Wilson v AMN Challenge Pty Ltd

I note that Mr Stephen Loftus the Director of the Company and its related entity AMN Challenge Pty Ltd requested that I provide observations as to whether Ms Karen Wilson was a former employee of the abovenamed Company. Enclosed herewith is a copy of the request.

A review of the books and records, shows that Ms Karen Wilson was an employee of the Company based on the following documentation:

An employment contract with the abovenamed Company stating Ms Wilson was employed on a full-time basis dated 1 June 2017;

Payslips covering the period of employment from 4 July 2017 to 8 November 2017;

Payment of wages and payslips issued during the period of my appointment as Voluntary Administrator (13 November 2017 to 3 December 2017);

Lodgement of FEG entitlements claim with the Department of Jobs and Small Business; and

Lodgement of a Proof of Debt with this Liquidation.

…………………….”

New Employment contract between AMN and Ms Wilson

[20] AMN submits that on 3 December 2017 Ms Wilson entered into a new contract of employment with AMN as a Bookkeeper. AMN provided copies of the Payroll Employee Summary for Ms Wilson indicating that she was paid by AMN from December 2017 through until her termination in 2 February 2018.

[21] I was provided as part of the evidence a copy of a letter of 4 December 2017 from Mr Loftus as Director of AMN to Ms Wilson that included the following;

“Dear Karen,

CONFIRMATION OF EMPLOYMENT TERMS

We are pleased to confirm your on-going employment with AMN Challenge Pty Ltd on the basis of the enclosed contract of employment (the Contract).

The Contract simply confirms your existing terms of employment. As such, please sign and return the document by 10 December 2017. If you fail to return a signed copy of the Contract by that date it will be assumed that you have accepted its terms.

EMPLOYEE HANDBOOK

Please also find enclosed a copy of the AMN Challenge employee handbook for your reference. Please return a signed copy of the acknowledgement form at the end of the handbook together with your Contract.

…………………….”

[22] The parties were in agreement that the contract referred to in the letter was not enclosed and was never provided to Ms Wilson. Given the conduct of the parties it can reasonably be inferred that despite there being no written contract, an employment contract was entered into between Ms Wilson and AMN.

CONSIDERATION

[23] There is no dispute that AMN is a small business employer and on that basis the Ms Wilson needs to have been employed for a minimum of 12 months continuous service in order to be within jurisdiction.

[24] I am satisfied for reasons that will be elaborated on below that Ms Wilson’s employment transferred from AMN to CCG in June 2017 and on the basis AMN and CCG were associated entities at that time the initial service with AMN can be taken into account.

[25] There is a dispute as to whether the employment period with CCG can be counted for the purposes of assessing the amount of continuous service of Ms Wilson. Ms Wilson’s primary submission is that she was always employed by AMN and the employment with CCG was only additional duties, and she continued to perform duties for both companies.

[26] Section 22 of the FW Act defines service and continuous service. Section 22(5) of the FW Act says as follows;

“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 employees 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.”

[27] Section 22(7) reads as follows:

“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) the following conditions are satisfied:

(i) the employee is a transferring employee in relation to the transfer of business from the first employer to the second employer;

(ii) the first employer and the second employer are not associated entities when the employee becomes employed by the second employer.” (my underlining)

[28] A note to s 22(7) provides that a transfer of employment does not require a transfer of business.

[29] It is apparent s.22(7)(a) applies only applies where the two employers are associated entities, and s.22(7)(b) applies to a transferring employee in relation to a transfer of business.

[30] Section 311 sets out when a transfer of business occurs as follows:

“When does a transfer of business occur

Meanings of transfer of business, old employer , new employer and transferring work

(1) There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:

(a)  the employment of an employee of the old employer has terminated;

(b)  within 3 months after the termination, the employee becomes employed by the new employer;

(c)  the work (the transferring work ) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;

(d)  there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).

Meaning of transferring employee

(2)  An employee in relation to whom the requirements in paragraphs (1) (a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.

Transfer of assets from old employer to new employer

(3)  There is a connection between the old employer and the new employer if, in accordance with an arrangement between:

(a)  the old employer or an associated entity of the old employer; and

(b)  the new employer or an associated entity of the new employer;

the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):

(c)  that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and

(d)  that relate to, or are used in connection with, the transferring work.

Old employer outsources work to new employer

(4)  There is a connection between the old employer and the new employer if the transferring work is performed by one or more transferring employees, as employees of the new employer, because the old employer, or an associated entity of the old employer, has outsourced the transferring work to the new employer or an associated entity of the new employer.

New employer ceases to outsource work to old employer

(5)  There is a connection between the old employer and the new employer if:

(a)  the transferring work had been performed by one or more transferringemployees, as employees of the old employer, because the new employer, or an associated entity of the new employer, had outsourced the transferring work to the old employer or an associated entity of the old employer; and

(b)  the transferring work is performed by those transferring employees, as employees of the new employer, because the new employer, or the associated entity of the new employer, has ceased to outsource the work to the old employer or the associated entity of the old employer.

New employer is associated entity of old employer

(6) There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employed by the new employer.”

[31] Section 12 of the FW Act provides the term ‘associated entities’ has the meaning given by Section 50AAA of the Corporations Act 2001.

[32] Section 50AAA of the Corporations Act 2001 reads as follows:

“Associated entities

(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.”

[33] Section 50 of the Corporations Act reads as follows:

“Related bodies corporate

Where a body corporate is:

(a)  a holding company of another body corporate; or

(b)  a subsidiary of another body corporate; or

(c)  a subsidiary of a holding company of another body corporate;

the first-mentioned body and the other body are related to each other.”

[34] Section 50 AA of the Corporations Act reads as follows:

“Control

(1) For the purposes of this Act, an entity controls a second entity if the first entity has the capacity to determine the outcome of decisions about the second entity's financial and operating policies.

(2)  In determining whether the first entity has this capacity:

(a)  the practical influence the first entity can exert (rather than the rights it can enforce) is the issue to be considered; and

(b)  any practice or pattern of behaviour affecting the second entity's financial or operating policies is to be taken into account (even if it involves a breach of an agreement or a breach of trust).

(3)  The first entity does not control the second entity merely because the first entity and a third entity jointly have the capacity to determine the outcome of decisions about the second entity's financial and operating policies.

(4)  If the first entity:

(a)  has the capacity to influence decisions about the second entity's financial and operating policies; and

(b)  is under a legal obligation to exercise that capacity for the benefit of someone other than the first entity's members;

the first entity is taken not to control the second entity.”

[35] I note that while both parties appeared to at times in the course of the hearing use the terms ‘related entities’ and ‘associated entities’ interchangeably, I emphasised to the parties a number of the times the distinction between the terms ‘related bodies corporate’ and ‘associated entities’ for the purpose of their respective arguments.

AMN Evidence and Submissions

[36] Mr Loftus gave evidence that he was a director and shareholder of CCG and there was another share holder involved with that entity Ms Cook who was the wife of Mr Slade. He said the company was put into administration on 13 November 2017 when he meet with Mr Glen Oldham of Oldham Advisory Pty Ltd and signed a Deed of Administration. He said he put CCG into administration because of matters involving fraud. He said there was an asserted liability and he consulted with his lawyer and the advice he received was to put the business into administration.

[37] Mr Loftus said a subsequent winding up application was made and the company was put into liquidation. He said Mr Oldham made clear to him on signing the Deed of Administration that he was no longer a director and all decisions pertaining to CCG needed to go through Mr Oldham. He said he was unaware of any arrangements Mr Oldham entered into with AMN.

[38] In cross examination he said the reference to ongoing employment in the letter he signed and gave to Ms Wilson dated 4 December 2017 was a reference to Ms Wilson having already been working for AMN in the days before the letter was provided. His evidence was to the effect that the liquidator had no involvement in the decision to offer employment to Ms Wilson.

[39] AMN firstly submits that CCG and AMN are ‘non-related entities’ as they do not fall within the definition of “associated entities” under s50AAA of the Corporations Act 2001. AMN submits that the two entitles are “completely independent of one another in terms of control, operations, resources, affairs and influence.”

[40] Secondly, AMN submits that there has been no transfer of business from CCG to AMN as section 311(1)(d) has not been satisfied, and there is no connection between CCG and AMN as defined in s 311(3) and 311(6).

[41] It was put that Section 311(3) is not relevant as CCG went into administration on 13 November 2017. The liquidation occurred on 11 December 2017. The employment of Ms Wilson was terminated and the executive power to make that decision was outside the control of CCG at the relevant time. There was no agreement or arrangement for the transfer of any assets from CCG to AMN including any transfer of employment.

[42] It was said an insolvency event brought about the end of Ms Wilson’s employment with CCG. Mr Moore submitted the legislative intent is to protect the continuity of service of employees where employers seek to rearrange there affairs. He submitted that there had been no intention on the part of those standing behind CCG or AMN to engineer such an arrangement and it has merely been as a consequence of a legal obligation on the part of the directors of CCG to put the business into administration when it could not meet its debts when they fell due. It was submitted that CCG ceased to be in the hands of the directors at that time. He said decisions of an administrator are outside the control of those who stand behind the entity.

[43] It was submitted that Section 311(4) is not relevant as an administrator was appointed and there was no outsourcing, Section 311(5) is not relevant for the same reasons and Section 311(6) is not relevant as CCG and AMN are not associated entities.

[44] AMN submitted that the CCG endeavour was clearly a separate business endeavour to AMN and Ms Wilson’s evidence supported this conclusion. AMN submitted that they had been at pains to try and obtain information from the liquidator about the affairs of CCG without success.

[45] Both the AMN and Ms Wilson were invited to file a brief further submission on the discrete matter of the effect of a business being in administration on control within the meaning of the Corporations Act 2001.

AMN Further Submission

[46] AMN submitted the following in its further written submissions:

“11. CCG was put into administration on 13 November 2017 and this is evidenced by the letter from Oldhams Advisory Pty Limited dated 17 April 2018. Accordingly, at the time of commencing her employment with AMN, CCG was under the control of the administrators and Mr Loftus did not have any influence or power over the affairs of CCG.

12. Section 437A of the CA states:

Section 437A - Role of administrator

(1) While a company is under administration, the administrator:

(a) has control of the company's business, property and affairs; and

(b) may carry on that business and manage that property and those affairs; and

(c) may terminate or dispose of all or part of that business, and may dispose of any of that property; and

(d) may perform any function, and exercise any power, that the company or any of its officers could perform or exercise if the company were not under administration.

(2) Nothing in subsection (1) limits the generality of anything else in it.

13. Section 437A(1)(a) makes it clear that the “control” of the company’s business, property and affairs is transferred to the administrator when the company goes into administration.

14. Section 442A of the CA further broadens the power of the administrator:

Section 442A - Additional powers of administrator

Without limiting section 437A, the administrator of a company under administration has power to do any of the following:

(a) remove from office a director of the company;

(b) appoint a person as such a director, whether to fill a vacancy or not;

(c) execute a document, bring or defend proceedings, or do anything else, in the company's name and on its behalf;

(d) whatever else is necessary for the purposes of this Part.

15. Section 422A indicates that following CCG entering into administration, Mr Loftus no longer had the power to maintain his position as the director of the company. This power is left in the hands of the administrator.

16. Section 437D further states that any transaction or dealing affecting the property of the company is void unless entered into by the administrator or upon obtaining the administrator’s consent. Any officeholder who enters into a transaction without the administrator’s consent is acting in contravention of this section. This section indicates that Mr Loftus would have contravened the CA if he engaged in any act or omission dealing with the company’s assets without the administrator’s prior consent. This effectively means that although Mr Stephen continue [sic] to hold office, he could not exercise any management powers or duties over the company unless directed by the administrator.

Section 437D - Only administrator can deal with company's property

(1) This section applies where:

(a) a company under administration purports to enter into; or

(b) a person purports to enter into, on behalf of a company under administration; a transaction or dealing affecting property of the company.

(2) The transaction or dealing is void unless:

(a) the administrator entered into it on the company's behalf; or

(b) the administrator consented to it in writing before it was entered into; or

(c) it was entered into under an order of the Court.

(3) Subsection (2) does not apply to a payment made:

(a) by an Australian ADI out of an account kept by the company with the ADI; and

(b) in good faith and in the ordinary course of the ADI's banking business; and

(c) after the administration began and on or before the day on which:

(i) the administrator gives to the ADI (under subsection 450A(3) or otherwise) written notice of the appointment that began the administration; or

(ii) the administrator complies with paragraph 450A(1)(b) in relation to that appointment; whichever happens first.

(4) Subsection (2) has effect subject to an order that the Court makes after the purported transaction or dealing.

(5) If, because of subsection (2), the transaction or dealing is void, or would be void apart from subsection (4), an officer or employee of the company who:

(a) purported to enter into the transaction or dealing on the company's behalf; or

(b) was in any other way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the transaction or dealing; contravenes this subsection.

17. It is evident that the legislation has been drafted in such a manner that the full control and influence over the affairs, property and management of the company is effectively left to the administrator. The officeholders may assist in the day-to-day management of the company and may continue to hold office, however, any decisions made must be reviewed and approved by, and is effectively left in the power of, the administrator.”

Ms Wilson Evidence and Submissions

[47] Ms Wilson accepted that unless the two employers are associated entities or a transfer of business occurred that the relevant period of employment is that with AMN as an employee. Ms Wilson’s initial primary contention is that she was continuously employed by AMN from June 2016 until 2 February 2018.

[48] Ms Wilson also initially submitted that notwithstanding her contention that she was continuously employed by AMN, AMN and CCG are associated entities as both appeared to be controlled by Mr Loftus, and the operations, resources or affairs of the two entities are both material to him, thus satisfying s.50AAA(7) of the Corporations Act and therefore s.22(7)(a).

[49] Ms Demarco submitted for Ms Wilson that little changed in the manner in which Ms Wilson performed her work throughout the entire period between 2016 and her termination by AMN in February 2018. Ms Demarco also submitted that while she did not have direct evidence of the fact she maintained the written offer of employment from AMN to Ms Wilson resulted from arrangement made between the administrator of CCG Mr Oldham and Mr Loftus.

[50] Ms Wilson’s evidence was to the effect that a person named Mr Gerard Slade became involved with Mr Loftus and this led to the creation of CCG. Ms Wilson said when she commenced working for CCG in June 2017 she became a Business Manager. She accepted during cross examination it was not the same role that she had been previously performing with AMN. Ms Wilson said she was making business management or executive decisions with Mr Loftus when employed by CCG. Ms Wilson said the decisions came from both Mr Loftus and Mr Slade, whereas with AMN previously it was just Mr Loftus.

[51] Ms Wilson said one business was to continue in just a sales and equipment role, and the other business was to be the contracting side. Ms Wilson accepted the arrangement involved a new business endeavour. Ms Wilson said her initial role with AMN involved bank reconciliations, accounts payable and liaising with a finance company. Ms Wilson said an external accountant assisted her in that initial role with AMN. Ms Wilson said with CCG Mr Slade would assist her as she understood he may have had an accounting background, and there was talk of bringing someone else in to assist but due to financial constraints this did not happen.

[52] Ms Wilson said CCG had new and separate bank accounts with Westpac and most work moved to CCG (from AMN), however AMN continued to trade during this time and she performed work for both. Ms Wilson said all employees including her and Mr Loftus were paid by CCG. Ms Wilson said on 13 November CCG went into administration and on 4 December the liquidator told her she would no longer be employed by CCG and would be moving back to AMN.

[53] Ms Wilson said when the liquidator took over CCG all employees and contractors were paid out of AMN. During cross examination Ms Wilson accepted she had been employed by CCG, and CCG paid her wages.

Claim to FEG Scheme and to ATO for superannuation

[54] Ms Wilson said Mr Oldham advised employees to make a claim to the Department of Jobs and Small Business for outstanding entitlements from employment with CCG to the FEG scheme which she did. Ms Wilson said at this time she received an offer of employment with AMN. Ms Wilson said she understood FEG spoke to the liquidator and they jointly determined a sum she was entitled to and she accepted that even though she thought it was less than she was entitled to.

[55] A document was produced with a title of ‘Leave Balances’ 2. Ms Wilson maintained some of her leave balance was transferred from CCG to AMN. Ms Wilson said payslips included a balance of leave entitlement.

[56] A further document was produced titled ‘Superannuation Accruals’ 3 which Ms Wilson claimed came from ‘zero’ which was a payroll system. Ms Wilson accepted she was responsible for the entries on this document. Ms Wilson said the document did not include entries for December 2017 to February 2018.

[57] A further document was provided to the Commission titled ‘Leave Balances Combined Communications Group Pty Ltd’ as at 20 November 2017. 4 Ms Wilson accepted that she prepared the document. She said she gave it to the liquidator. Ms Wilson said the 62.4272 against her name on the document was personal leave. Ms Wilson said the balances from CCG were transferred. Ms Wilson was referred to the other Leave Balances document and the annual leave balance of 63.7523 hours against her name. Ms Wilson said she could not answer who prepared the report.

[58] It was put to Ms Wilson that she entered the leave credits into the system herself. Ms Wilson said anybody who had access to ‘zero’ could have done that. She said both and Mr Loftus and herself had access to ‘zero’.

[59] I have not reached a conclusion on who entered these leave balances into the payroll system, but in any event there is an inconsistency between the fact that Ms Wilson could and did claim unpaid outstanding leave entitlements from FEG for her employment with CCG, but to also suggests that leave was carried over and recognised by AMN when she returned to employment with AMN in December 2017. It is stating the obvious to say that the same entitlement cannot be claimed twice.

[60] Ms Wilson said she made a claim against AMN for unpaid superannuation entitlements. Ms Wilson said the liquidator told her she could not claim unpaid superannuation entitlements against CCG through the FEG Scheme and would need to go through the ATO.

Ms Wilson Further submission

[61] The further submission filed for Ms Wilson after the hearing took a different approach to that adopted previously, making the concession that in the applicants view AMN and CCG were associated entities at the time of termination due to the appointment of the voluntary administrator on 13 November, 5 and therefore the matters should be determined by reference to the statutory rules concerning non-associated entities.

[62] It was put that it needs to be established whether Ms Wilson was a transferring employee and whether a transfer of business occurred between CCG and AMN. It was put that s.311(1)(a)(b) and (c) were satisfied and the question turns on whether there was a connection between CCG as the old employer and AMN as the new employer.

[63] Without setting out the submission in detail it was put on the basis of a satisfied of one or all of s.311(3) regarding beneficial use of some or all assets, or (4) and (5) concerning outsourcing and insourcing.

CONCLUSIONS

[64] Given some change in positions put in the course of the matter, out of an abundance of caution I will deal with each of the positions put.

[65] As I understand the initial submission for Ms Wilson that she was continuously employed by AMN, it is put whilst not expressed this way, on the basis that the alleged employment by CCG was ineffective in isolating her employment from AMN, and isolating AMN from its employment obligations to her. An issue of this nature was dealt with in a Federal Court decision of Buchanan J in Fair Work Ombudsman v Ramsay Food Processing Pty Ltd 6.

[66] When I pressed Ms Demarco during opening submissions for clarification on this point she said the submission was that the two businesses were associated entities. Ms Demarco went on to make a submission to the effect that the two businesses had shared the same assets. Ultimately given what appeared to be an assertion about that the employment arrangement with CCG not being genuine I indicated Ms Wilson should give evidence on the matter.

[67] The evidence of Ms Wilson, and later Mr Loftus satisfied me CCG was more than just a bank account or some sham arrangement inter-posed between Ms Wilson and AMN in order to avoid legal responsibility. CCG was a business of its own, and it appears clear from the material that in June 2017 Ms Wilson’s employment transferred from AMN to CCG when she accepted the offer of a contract of employment with CCG.

Were AMN and CCG related bodies corporate?

[68] Section 12 of the FW Act states that the term ‘related body corporate’ has the meaning given by the Corporations Act 2001. Mr Moore submitted that the businesses were not related bodies corporate on the basis of the ASIC extracts. On the basis of that material it appears clear that AMN and CCG are not related bodies corporate within the meaning of s50 of the Corporations Act in that one is not a holding company of the other, or a subsidiary of the other, or a subsidiary of a holding company of the other.

Were AMN and CCG associated entities?

[69] Section 12 of the FW Act states that the term ‘associated entity’ has the meaning given by section 50AAA of the Corporations Act 2001. It is convenient to deal with the question in s.311(6) as to whether AMN and CCG are associated entities.

[70]  The issue of control as defined in s50AA is a central consideration. Given CCG was in administration at the time of Ms Wilson becoming employed for a second time by AMN, can it be said that Mr Loftus had control over the affairs of CCG at that time?    The answer must be no and therefore CCG and AMN were not associated entities on 4 December 2017 when Ms Wilson commenced employment with AMN for the second time.

[71] I am satisfied from the evidence and submissions that when CCG entered administration on 13 November 2017 Mr Loftus lost control of CCG. 13 November 2017 was several weeks before Ms Wilson was subsequently re-employed by AMN on 4 December 2017.

[72] Given s22(7)(a)(ii) requires that CCG and AMN were associated entities “when the employee becomes employed by the second employer”, ss22(7)(a) does not apply in this case for the purpose of Ms Wilson being able to rely on that service with CCG to satisfy s.383.

[73] Given my conclusion on that matter it is strictly unnecessary to consider whether CCG and AMN were associated entities before CCG went into administration and subsequent liquidation, however for completeness I express the view that the evidence appears to make clear CCG and AMN were. The ASIC extracts and the evidence of Ms Wilson and Mr Loftus concerning the operations of CCG and AMN up until 13 November 2017 were such that I am satisfied Mr Loftus had control over both CCG and AMN, and the operations, resources or affairs of AMN and CCG were both material to the Mr Loftus. On that basis up until 13 November 2017 ss.50AAA(7) would have been satisfied, however that does not assist Ms Wilson because that ceased to be the case before her employment returned to AMN.

Was there a transfer of business between CCG and AMN?

[74] AMN’s jurisdictional objection will still fail if the conditions in s.22(7)(b) are satisfied. On the basis of the conclusion above s.22(7)(b)(ii) is satisfied (because CCG and AMN were not associated entities as at 4 December 2017). That then requires consideration of s.22(7)(b)(i). That question is determined by reference to the requirements of subsection 311(1) of the Act. Each of the matters contained in paragraphs (a) to (d) must be satisfied in order to establish a transfer of business. On the evidence it would appear Ms Wilson can prove satisfaction of each of s 311(1)(a),(b) and (c). The question then becomes whether there was a connection between the old employer and the new employer as described in any of subsections (3) to (6), as posed in s.311(1)(d).

[75] Contrary to the further submission for Ms Wilson subsections (4) and (5) are not applicable as the evidence cannot support a finding that a decision was made by either entity to outsource or insource at the relevant time. This is because the power did not exist for either entity to make such a decision at the relevant time given CCG had entered administration.

[76] Subsection (6) has already been excluded for reasons set out above.

[77] The question then turns on whether there is a connection between CCG and AMN on the basis that AMN owned or had the beneficial use of some or all of the assets of CCG in accordance with an arrangement between them as described in subsection (3).

[78] A Fair Work Commission Full Bench in John Lucas Hotel Management Services T/A World Square Pub v Ms Vanessa Hillie 7considered this question in some detail. The Full Bench said that guidance as to the use and meaning of the word “arrangement” could be found in previous judgements concerning trade practices and taxation matters.8

[79] The evidence does not disclose any arrangement made between CCG and AMN involving a transfer of assets as contemplated by s311(3). I have taken into account the evidence of Ms Wilson that she had the use of a car, laptop and mobile phone that she was provided by AMN during her initial employment with AMN, and that she continued to enjoy the use of when she was employed by CCG, and continued to retain the use of those things when she returned to employment with AMN. While it is unfortunate there was no direct evidence on this point, it would seem most likely these assets always remained the property of AMN. If that is correct, the fact that AMN allowed her to continue to use these assets while employed by CCG does not mean that she remained an employee of AMN after she accepted the full time position at CCG. The evidence is clear CCG employed her from June 2017 until November 2017 and not AMN.

[80] Even had it been the case that these assets become the property of CCG it would have been unlawful for CCG to transfer them to AMN after it went into administration unless sold to AMN by the administrator. There was no evidence that this occurred, but even if it had, it could not have been done as part of arrangement between CCG and AMN, but instead would have been an action of the administrator in managing the insolvency. That is clear from the provisions of the Corporations Act 2001 referred to above. It follows then that there was not a transfer of business between CCG and AMN.

[81] On the basis of the conclusions above Ms Wilson did not complete the minimum employment period and is not therefore a person protected from unfair dismissal and the application must be dismissed.

COMMISSIONER

Appearances:

Ms M Demarco of Demarco Law appearing for the Applicant

Mr C Moore of Aejis Legal appearing for the Respondent

Hearing details:

2018,

Brisbane:

May 14.

<PR607368>

 1   Exhibit 2

 2   Exhibit 3

 3   Exhibit 4

 4   Exhibit 5

 5   Applications submissions 22 May 2018 para 7 and para 19

 6 [2011] FCA 1176

 7   [2013] FWCFB 1198

 8   [2013] FWCFB 1198 para 19

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