Kathleen Te Raki Glenn Te Raki v Peloton Sportz Pty Ltd T/A Carine and Cottesloe Cycles

[2016] FWC 4215

[2016] FWC 4215

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Kathleen Te Raki
Glenn Te Raki
v
Peloton Sportz Pty Ltd T/A Carine and Cottesloe Cycles
(U2016/7109 and U2016/7110)

DEPUTY PRESIDENT GOOLEY MELBOURNE, 29 JUNE 2016

Application for relief from unfair dismissal.

[1] Mrs Kathleen Te Raki and Mr Glenn Te Raki alleged the termination of their employment by Peloton Sportz Pty Ltd was unfair. In their applications they advised that they commenced employment on 20 January 2016 and their employment ended 6 May 2016.

[2] The matter was listed for a telephone conference on 27 June 2016.

[3] Mr Te Raki was not available for the hearing despite being on notice that the hearing was on and Mrs Te Raki represented both herself and Mr Te Raki. I granted permission for Peloton to be represented by a lawyer as I accepted the submission that the matter involved some complexity and it would enable the matter to be dealt with more efficiently.

[4] On 26 May 2016, I caused correspondence to be sent to Mr and Mrs Te Raki and I advised them that, on the basis of the information provided, they had not served the minimum employment period of six months. In his response Mr Te Raki stated that they commenced work in November 2015.

[5] On 8 June 2016, Peloton advised that it had acquired the business in which Mr Te Raki worked on 21 January 2016 and that was the date his and Mrs Te Raki’s employment with Peloton commenced.

[6] Mrs Te Raki then advised that the date of employment was 12 October 2015 and they were required for administration and manager duties to assist with registration, banking and all paperwork required. Peloton then acquired two retail stores which she and Mr Te Raki managed from 21 January 2016.

[7] I then asked Peleton to provide any written correspondence provided to Mr and Mrs Te Raki which advised that service with the previous employer was not to be recognised as service with Peloton.

[8] In correspondence sent by my chambers to Mr and Mrs Te Raki on 16 June 2016, they were put on notice that Peloton contended that it was a small business and that as the previous owner of the business was a sole trader even if there was a transfer of employment from the sole trader to it, service with the sole trader did not count as it was not a national system employer. Mr and Mrs Te Raki were directed to provide evidence of the identity of their employer from 12 October 2015 and an outline of argument and statement of evidence to support their contention that they had served the minimum employment period. Peleton was also directed to file evidence to support its contention that it was a small business. It was also directed to file a statutory declaration by an authorised officer of the company addressing whether there are any associated entities (s.50AAA of the Corporations Act 2001) and if there are, the number of employees of the associated entities.

[9] On 24 June 2016, Ms Julie Smith filed an affidavit on behalf of Peloton. Peloton was registered on 12 October 2015. Its original office holders were Mr Te Raki and Mrs Te Raki but they ceased to be directors on 5 May 2016. Mr Richard Smith and Ms Julie Smith were also directors and its only shareholders.

[10] Ms Smith said she was negotiating the purchase of two bicycle retail stores from a sole trader. At this time Mr Te Raki was employed by the sole trader.

[11] A contract of sale was entered for the business in late 2015. It provided that the business had seven employees at the time, including Mr Te Raki. Ms Smith gave evidence that following the purchase of the business there were six employees including Mr and Mrs Te Raki. As at 5 May 2016, Peloton had 13 employees including Mr and Mrs Te Raki.

[12] Ms Smith gave unchallenged evidence that Peloton had no related entities.

[13] Mr and Mrs Te Raki did not, at the hearing, provide any documentary evidence to support their contention that they were employed by Peloton from October 2015. They provided an email which supports a finding that in August 2015 there were discussions between them and Mr and Ms Smith about the business however that does not support a finding that they were employed by Peloton. In any event at that date Peloton was not registered. There was no evidence that upon incorporation Peloton ratified any employment contract with Mr and Mrs Te Raki.

[14] Clearly from October 2015 they were directors of Peloton but again that is not evidence that they were employees of Peloton. Mrs Te Raki claimed that there was an oral employment agreement but no monies were paid in the period prior to January 2016.

[15] An employee is required to have served six months (one year if employed by a small business) employment to be protected from unfair dismissal.

[16] In determining whether Mr and Mrs Te Raki have served the minimum employment period, no assessment has been made about the merits of their case. The Commission has no discretion to waive the requirements of the Fair Work Act 2009.

[17] I am satisfied on the evidence before me at the hearing, that Peloton was, at the relevant time, a small business. Ms Smith’s evidence is supported by the payroll records of Peloton. Mrs Te Raki did not challenge those records. She did however allege that there were employees of Peloton who were paid cash in hand. This allegation was denied by Peloton but in any event Mrs Te Raki had been on notice since 24 June 2016 that Peloton was claiming to be a small business. If there were casual employees, they needed to be engaged on a regular and systematic basis with a reasonable expectation of continuing employment on a regular and systematic basis. Mrs Te Raki provided no evidence of the number of such persons and the terms on which they were engaged. She described them as seasonal.

[18] After the hearing Mrs Te Raki provided a list of persons she alleged were employed by Peloton. She provided no supporting documentation to support this claim. She advised that she could provide contact details. She further advised that she did not agree with Ms Smith’s affidavit. However at the time Mrs Te Raki did not challenge Ms Smith’s evidence. It is not the role of the Commission to investigate claims and contact witnesses. It was Mr and Mrs Te Raki’s obligation to provide its evidence to the Commission in compliance with the directions and have that evidence, either in the form of statements of evidence or documents, at the hearing.

[19] Peloton responded to Mrs Te Raki’s email. It detailed its response to her allegation that there were additional employees. It further stated that it was Peloton’s position that “at 6 May 2016, it had not more than 13 employees. The respondent has supported its position with a sworn affidavit attaching supporting records from the business’s payroll system. If the applicants wished to take issue with this evidence, they ought to have put on their own evidence in accordance with the directions made 16 June 2016. Further, the respondent submits that the applicants’ employment with the respondent did not commence earlier than January 2016 and the applicants have not put forward any evidence to counter this nor were any submissions made by Mrs Te Raki at yesterday’s hearing that could provide a proper basis for the Commission to find to the contrary. The applicants do not meet the minimum employment period on either the 6 month or 12 month test.”

[20] Mrs Te Raki replied and made allegations that two of the employees who had previously been employed by the sole trader “had requested to work on a casual basis on weekends and some other days. Payment of wages will be evident in bank statements and will be on the accounting file under the employee’s name. These entries were done by myself at the time of employment as per my administration duties. Payment for work carried out was also made from cash at $90 per day for CT and $100 per day for JF. These payments were approved by Glenn Te Raki and Richard Smith on every occasion.”

[21] Further Mrs Te Raki alleged that another employee had not ceased employment rather he was on leave without pay and only when he returned five weeks later was he told that he was no longer employed. Further, Mrs Te Raki alleged that another person was paid cash in hand for work done afterschool.

[22] No documentary evidence was provided to support these allegations and they were not put to Ms Smith at the hearing. Further there is no evidence that the two employees referred to by Mrs Te Raki were employed on a regular and systematic basis with a reasonable expectation of continuing employment on a regular and systematic basis. Not all casual employees are included in the determination of whether a business is a small business.

[23] In circumstances where Ms Smith provided an affidavit to support her claim that Peleton was a small business it was incumbent on Mr and Mrs Te Raki to provide evidence to the contrary. Further they were obliged to do that at the hearing. While I acknowledge that Mr and Mrs Te Raki were unrepresented in this matter that does not absolve them of this responsibility. They were on notice prior to the hearing that Peloton claimed it was a small business and they received Peloton’s evidence prior to the hearing. The information they put in their emails after the hearing was clearly available to them prior to the hearing and they could have given evidence at the hearing about these matters but did not do so. I have therefore not had regard to the material filed after the hearing.

[24] I am satisfied that, on the evidence before me at the hearing, Peloton was a small business at the time of the dismissal, and given Mr and Mrs Te Raki were not employed for 12 months, they were not protected from unfair dismissal and their applications must be dismissed.

[25] If I am wrong and Peloton was not a small business, I am not satisfied on the evidence before me that Mr and Mrs Te Raki were in fact employed by Peloton prior to it purchasing the cycle business. Mr and Mrs Te Raki were directed to file material in support of this contention but only filed the email of August 2015. There is no dispute that they were directors of Peloton. However that they were directors of Peloton does not, without more, make them employees of Peloton. For directors to become employees there must be an employment agreement either oral or in writing. I could not be satisfied on Mrs Te Raki’s evidence that there was a separate employment agreement. I do not doubt that they performed functions for Peloton however I am not satisfied that the work was performed under a contract of employment.

[26] I am not satisfied that Mr and Mrs Te Raki commenced employment with Peloton prior to January 2016. The evidence established that Mr Te Raki was employed by Ms Jody Waghorn prior to her business being sold to Peloton. There was no evidence that Mrs Te Raki was employed by Ms Waghorn. Ms Waghorn as a sole trader was not a national system employer. As such, even if there was a transfer of business, Mr Te Raki’s service with Ms Waghorn does not count towards his service with Peloton.¹

[27] I am therefore not satisfied that Mr and Mrs Te Raki had served the minimum employment period of six months and therefore their applications for an unfair dismissal remedy must be dismissed.

DEPUTY PRESIDENT

Appearances:

K. Te Raki for the Applicants.

R. Squires for the Respondent.

Hearing details:

2016.

Melbourne and Perth, by telephone link:

June 27.

1 s.22(7) and s.384

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