Kathrine Pegler v The Trustee for Clearpond Trust T/A Clearpond Australia Pty Ltd

[2018] FWC 2536

[2018] FWC 2536

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Kathrine Pegler
v
The Trustee for Clearpond Trust T/A Clearpond Australia Pty Ltd
(U2018/323)

COMMISSIONER LEE MELBOURNE, 24 MAY 2018

Application for an unfair dismissal remedy.

Introduction

[1] This matter involves an application to the Fair Work Commission (the Commission) made pursuant to section 394 of the Fair Work Act 2009 (the Act) for unfair dismissal remedy. Ms Pegler (the Applicant) claims she was unfairly dismissed from her employment with The Trustee for Clearpond Trust T/A Clearpond Australia Pty Ltd (the Respondent).

[2] A jurisdictional objection has been raised by the Respondent alleging that it is a small business employer within the meaning of the Act and that the Applicant has therefore not completed the minimum employment period. The Applicant disputes that the Respondent was a small business employer at the relevant time.

[3] The matter was listed for Jurisdiction (Minimum Employment Period – Small Business) Conference/Hearing before me on 3 April 2018. The Applicant represented herself and gave evidence on her own behalf. Mr Edwards was granted permission to appear for the Respondent as I was satisfied that granting permission would enable the matter to be dealt with more efficiently, taking into account the complexity of the matter. Mr Simon Line is the sole director of Clearpond Australia Pty Ltd and sole trustee of the Clearpond Trust and gave evidence for the Respondent. 1

Law to be applied

[4] Section 382(a) of the Act provides as follows:

“382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.”

[5] It is not necessary to deal with the factors in s.382(b) of the Act as I am simply dealing with the minimum employment period.

[6] Section 384(1) of the Act provides the meaning of “period of employment”:

“384 Period of employment

(1) An employee’s period of employment with an employer at a particular time is the period of continuous service the employee has completed with the employer at that time as an employee.”

[7] Section 383 of the Act provides the meaning of “minimum employment period”:

“383 Meaning of minimum employment period

The minimum employment period is:

(a) if the employer is not a small business employer—6 months ending at the earlier of the following times:

(i) the time when the person is given notice of the dismissal;

(ii) immediately before the dismissal; or

(b) if the employer is a small business employer—one year ending at that time.”

[8] Section 23 of the Act relevantly defines a small business employer as follows:

“23 Meaning of small business employer

(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.”

Background

[9] It is common ground that the Applicant commenced employment on 15 May 2017. There is some controversy as to whether the Applicant resigned or whether she was dismissed. However, for the purposes of these proceedings it is agreed that the period of continuous service is from 15 May 2017 to 5 January 2018. This is a period of greater than 6 months but less than 12 months.

[10] Therefore, it is clear that if the Respondent was a small business employer at 5 January 2018 the Applicant does not meet the minimum employment period.

Evidence

[11] The Respondent is an importer and distributor of water management products and has employees in Western Australia, Victoria and New South Wales. 2 The Applicant was employed as a Business Support Manager when her employment ended. It is fair to say that the assertions of the Respondent as to how many employees were employed at 5 January 2018 has been somewhat of a moving target. In its Form F3 – Employer Response to Unfair Dismissal Application it was asserted that there were 9 employees at the time the Applicant was dismissed. In a letter dated 20 February 2018 provided by a Mr Dorazio of Walker Wayland (WA) Pty Ltd which states that the firm has been engaged as the Respondent’s accountant for the “past few years” and asserts that at 29 December 2017 there were 11 employees. There is also a copy of an email from Ms Katie Bondi, the Respondent’s bookkeeper addressed to Mr Line dated 12 February 2018 which lists the number of employees which Ms Bondi says are all of the employees of the Respondent at 20 December 2017 which is a total of 12 employees.3 Despite this the Respondent’s representative stated in his opening submission at the hearing that there were 11 employees at the time of the alleged dismissal on 20 December 2017.4

[12] In any event, during the hearing it was agreed that, as a minimum, the following 12 employees were employees of the Respondent as at 5 January 2018: 5

•  Brendan Snashall

•  Blake Hill

•  Mary Watterson

•  Attila Rudics

•  Graham Endall

•  Katherine Pegler

•  Khaled Chamseddine

•  Badhi Chamseddine

•  Duncan Grant

•  Rayan Saab

•  Greg Smith

•  Robin Maras

[13] I note that this list of 12 employees is different from the list of 12 employees provided in the email from Ms Bondi in that it includes Robin Maras and does not include Michael Danagher. Despite Ms Bondi appearing to consider Mr Danagher to be an employee, the Respondent claims that he is not.

[14] In her evidence the Applicant set out a list of employees she asserts, or did assert prior to the hearing, were employees of the Respondent at 20 December 2017. 6 I note that while 20 December 2017 is an earlier date than the relevant date of 5 January 2018, it is not apparent that there was any change in the number of employees during that intervening period.7

[15] The Applicant’s list of claimed employees aligns with the agreed list of employees set out above with the following exceptions: Simon Line, Wendy Line, Michael Danagher, Christina Kougiannis, Scott Robinson and Clive Harrison. I note that the Applicant’s reference to Mr Scott Robinson was in error and that the individuals name is in fact Mr Scott Anderson as confirmed by Mr Line during the hearing. 8 I also note that Ms Christina Kougiannis has changed her name to Ms Christina Matic and evidence was produced by the Respondent after the hearing confirming the change of name. To be clear any reference in this decision to Mr Robinson is reference to Mr Anderson and any reference to Ms Matic is reference to Ms Kougiannis.

[16] The Respondent filed materials subsequent to the hearing including payroll reports for the December 2017/January 2018 period, evidence as to the date Mr Scott Anderson commenced employment with the Respondent and evidence of the resignation of Ms Christina Kougiannis. The Applicant was provided an opportunity to provide any comments and submissions she wished to make in relation to any of the materials filed by the Respondent subsequent to the hearing. The Applicant provided a response on 13 April 2018. The Applicant’s response included an organisational chart which the Applicant created based on what she recalled “to the best of her memory”. The Applicant submitted that the payroll reports are not for a time period but for one date only. However, I note that the accompanying email from Ms Bondi makes clear that the date on the payroll reports is the date the payments are made. The Applicant suggests that the payroll summaries are not inclusive of all employees because the date range is only for one date and further that the report only includes employees selected and payments made on the date selected. It seems the Applicant is querying why Mr Danagher, Mr Maras and Ms Kougiannis are not on the payroll reports when they are paid on a monthly basis and is speculating about the possible existence of other unnamed employees. This is simply speculation and there is no evidence to suggest that there are any other employees, or potential employees beyond those named and dealt with in this decision, which includes Mr Danagher, Mr Maras and Ms Kougiannis. To be clear, I have considered all of the names of potential employees submitted by the Applicant at Appendix L to her statement.

[17] With respect to Mr Scott Anderson and Mr Clive Harrison it seems clear that they were not employees at the relevant time or in the case of Mr Harrison, never an employee. Mr Line gave evidence that Mr Clive Harrison is the owner of Clearpond in New Zealand which is a totally separate entity that was never under the ownership of the vendor of Clearpond Australia and that Mr Harrison buys product from the Respondent which they transport to him. Mr Line stated that there is no financial relationship between the Respondent and Mr Harrison and his business other than that of a customer of the Respondents business. 9 During the hearing the Applicant agreed that based on the evidence of Mr Line, Mr Harrison is not capable of being included in the list of employees.10 I am satisfied on the evidence that Clive Harrison is not an employee of the Respondent.

[18] With respect to Mr Anderson, the Applicant agreed that if he did in fact commence employment with the Respondent on 28 January 2018 then he is also not capable of being included in the list of employees. 11 It is clear from the email dated 4 April provided by the Respondent’s representative subsequent to the hearing that Mr Anderson commenced employment with the Respondent on 29 January 2018. Mr Line gave evidence during the hearing that his commencement date was 29 January 2018.12 The Respondent also filed an MYOB screen shot and Mr Anderson’s contract of employment. The MYOB screen shot and the contract of employment state that his employment commenced on 29 January 2018. I am satisfied on the evidence that Scott Anderson was not an employee of the Respondent at the relevant time, being 5 January 2018 and should not be included in the list of employees.

Consideration

[19] At the conclusion of the hearing the Applicant’s position was that Simon Line, Wendy Line, Michael Danagher, and Christina Kougiannis were all employees at the date of her dismissal and should be included in the number of employees. 13 I will deal with each of them in turn. Prior to doing so I will deal briefly with the matter of associated entities and its relevance to this application.

Associated Entities

[20] For the purpose of calculating the number of employees employed by an employer at a particular time, associated entities are taken to be one entity. Section 12 of the Act provides that Associated Entity has the meaning given by section 50AAA of the Corporation Act 2001.

[21] The Applicant did not assert that there were any employees of an associated entity and was generally unaware of its relevance. 14 Mr Line’s evidence is that he is the sole trustee of the Line Family Trust which has no employees. The Line Family Trust is the beneficial owner of two businesses being the Respondent company and Australian Airport Terminal Services Pty Ltd which owns a self-storage facility at Perth Airport which is managed under contract by the Storage King Group. While the Respondent submits that it does not have any related entities15 it concedes that the only associated entity of the Respondent is arguably Australian Airport Terminal Services Pty Ltd but that at the relevant time it had no employees and still had no employees as at 26 February 2018. 16 Therefore, the Respondent submits and I accept that there are no employees of any associated entity for the purposes of calculating the number of employees employed at the date of the Applicant’s dismissal.17

Simon Line

[22] Mr Simon Line submits that he is the sole director of Clearpond Australia Pty Ltd and sole trustee of the Clearpond Trust. 18 The Applicant reported to Mr Line during her employment.19 Mr Line’s evidence is that he is not an employee of the Respondent20 and that he does not draw a salary or receive payment for superannuation from the Respondent.21 Mr Line stated the Line Family Trust, which owns all the units in the Clearpond Trust, does a distribution at the end of each year and it may or may not distribute funds to him.22 The Applicant was unsure as to the background of Mr Line’s employment and whether he drew a salary or not, and her evidence was the same for Ms Kougiannis and Mrs Line on this point. The Applicant’s evidence was that she considered they were employees based on her “experience of working with them and what I know from people talking at Clearpond”. 23 Having considered the evidence in respect to Mr Line, I am satisfied that he is not an employee of the Respondent. Importantly, I note that Mr Line is a corporate director of the Respondent with the associated responsibilities and therefore could not have an employment relationship with the Respondent. There is no evidence of Mr Line drawing a salary from the business. I am satisfied on the evidence that Mr Line is not an employee of the Respondent.

Michael Danagher

[23] Michael Danagher is the National Commercial Director of Respondent. 24 The Applicant reported to him during her period of employment. The Respondent submits that Mr Danagher worked for the Respondent at the date of the Applicant’s dismissal but at all material times has not been an employee but been an independent contractor.25

[24] As mentioned earlier, there is an email from the Respondent’s representative to the Applicant in evidence which attaches a list of names of employees as at 20 December 2017 sent from Ms Katie Bondi, a contracted independent bookkeeper for Mr Line. 26 The list of names included Mr Danagher. During the hearing Mr Line claimed that Ms Bondi “overlooked” the fact that Mr Danagher is employed as a consultant and he pointed this out to Ms Bondi.27 Ms Bondi did not give evidence. Mr Line’s evidence was that as he understands it Mr Danagher is a privately employed/self-employed person and does work for the Respondent and others, having been involved in the commercial real estate industry and the finance industry for many years.28 Mr Line was rather vague when asked who else Mr Danagher worked for29 but explained that his consultancy with the Respondent was a contract to drive sales in the commercial field.30

[25] Mr Line claimed he did not know how many hours per week Mr Danagher works for the Respondent as he does not monitor what he does day to day, that he does not come into the office every day and that he is paid a monthly consultant rate that does not include payment for superannuation entitlements. 31 Mr Line’s evidence was that since Ms Pegler ceased employment Mr Danagher may have been in the office four times; however, when Ms Pegler was employed he was in the office most days because his specific task was to make sure that Ms Pegler and another employee, Mr Rudicks, were on the telephones during the day talking to the dealer network.32 Ms Pegler was clear in her evidence that Mr Danagher was an employee based on the consistent nature of his engagement and also having a line of responsibility. Mr Line gave evidence that Mr Danagher was paid a set amount every month that did not vary.33 This was inconsistent with earlier evidence he gave where he claimed that he did not know how often Mr Danagher was invoiced.34

[26] Mr Line made a point of referring to Mr Maras, who like Mr Danagher is also paid through a monthly invoice arrangement. However, Mr Line conceded that Mr Maras is in fact an employee. When asked to differentiate between Mr Maras and Mr Danagher and why one is an employee and one is not given they are both paid on an invoice arrangement, Mr Line’s evidence related to the amount of time Mr Maras was in the workplace “bolted to our warehouse” and that he was there for the standard operating hours all day with the specific task to run the warehouse. 35

[27] Considering all of the evidence, I cannot see how Mr Danagher can be anything other than an employee, most certainly at the time that the Applicant was dismissed. There is no clear evidence that Mr Danagher was carrying on a trade or business of his own as opposed to serving the Respondent in his business. 36 He was at the workplace most of the time while the Applicant was employed and certainly was there when her employment came to an end. He was directing the Applicant and others in their work. He was paid the same amount every month without variation. There is simply no or very little indicia to suggest that Mr Danagher was an employee.37 I have considered the evidence of Mr Line that he considers Mr Danagher to be an independent contractor and the parties have agreed that is the relationship. I agree that the “label” the parties have expressly given to their legal relationship is an important consideration.38 However, the parties cannot create something that has every feature of a rooster, but call it a duck and insist that everyone else recognise it as a duck.39 I am satisfied that Mr Danagher was an employee at the relevant time.

Wendy Line

[28] Wendy Line is Mr Simon Line’s wife. The Applicant submits that she was titled as Marketing Manager for the Respondent and was the direct supervisor for Ms Kougiannis. The Respondent submits that she was not an employee or contractor and that she has occasionally provided informal oral advice about marketing for the Respondent but not as a contractor or an employee. 40 During the hearing Mr Line gave evidence that Mrs Line gives nothing more than occasional advice and does not draw a salary and has never been remunerated by the Respondent in any way.41 The payroll reports submitted by the Respondent show that Mrs Line was not paid a salary during the relevant period. The organisational chart submitted by the Applicant subsequent to the hearing which she created based on her recollections demonstrates that the Applicant considered Mrs Line to be included in the organisational structure as the Marketing Manager.

[29] Mr Line maintained during the hearing that while it was the idea that Mrs Line would be involved when the business was purchased, he claimed that they could not work together and while he pressured her to be involved she was never involved and that she is a full-time professional artist so she “…paints all day”. 42 However, the Applicant gave evidence on which she was not challenged that as recently as December 2017 Mr Danagher asked her to discuss a PDF file with Mrs Line that was to be sent out to customers before it was sent out and to have her approve it. The Applicant agreed that any work that Mrs Line did was from home.43 Further, the Applicant was unsure as to the background of Mrs Line’s employment and whether she drew a salary or not.44 Having considered the evidence, I am of the view that Mr Line has somewhat understated the role of his wife in the business. However, the evidence supports a finding that she was not remunerated at all for the level of involvement that she had in the business. In that sense it appears her role was one of supporting her husband in his endeavours to run the business, but I am not satisfied that she did so as an employee of the business. In an employment relationship, labour is traded for remuneration. There is a provider, a purchaser, an exchange and a contract containing terms and conditions that regulate the exchange. 45 I am not satisfied that there was an employment relationship between the Respondent and Mrs Line, at best she might be considered a volunteer.

Christina Kougiannis

[30] Christina Kougiannis was employed as a Marketing Coordinator, the Applicant says she was an employee in February 2018 when she sent her a message via the app Snapchat. 46 The Respondent claims she was an employee until 1 December 2017. During the hearing Mr Line gave evidence that Ms Kougiannis resigned from her employment by mutual agreement. Further, that she is now working as a contractor doing their AdWords and SEO from home, invoices the Respondent on a monthly basis and does that for others as well as she has reverted back to what she was doing before she worked for the Respondent.47 The Applicant provided a screenshot of a Snapchat conversation which is consistent with Ms Kougiannis doing the Ad word/SEO work for the Respondent. Following the hearing the Respondent filed an email from Ms Christina Matic to Ms Bondi dated 1 December 2017. The email states, omitting formal parts:

“Today is my last day at working at Clearpond. However, I will still manage their AdWords and SEO. Could you please email my next payslip to [email address supplied]”

[31] The Applicant submitted in response that this email was not a resignation letter, just a request to Ms Bondi to send her next payslip to her personal email as she would be working for the Respondent from home going forward. Mr Line gave evidence that Ms Kougiannis trades as “CB digital” and now works from home as a consultant. 48 It is clear from the payroll reports submitted that Ms Kougiannis is no longer paid a salary from the business. The Applicant was unsure as to the background of Ms Kougiannis’s employment and whether she drew a salary or not.49 Having considered the evidence, I am satisfied that Ms Kougiannis is now operating her own business “CB Digital” and providing a specific service to the Respondent on a contractor basis. I am satisfied that she was not an employee at the time the Applicant was dismissed. I note that it is possible that if Ms Kougiannis is not in fact providing services beyond that of services for the Respondent and there has simply been an agreement to recharacterize the relationship as an independent contractor arrangement, she may still be an employee. Certainty on this cannot be attained without further evidence. However, there is no utility in pursuing this as it makes no difference to the ultimate result, as discussed below.

Conclusion

[32] It is clear from the evidence above that it is common ground that the Respondent had 12 employees at the time the Applicant’s employment ended. I am satisfied that Mr Danagher was also an employee at the relevant time, being a total of 13 employees. However, I am not satisfied for the reasons discussed above that there were any other employees of the Respondent. On the evidence before me, I am satisfied that Ms Kougiannis was an independent contractor and not an employee at the relevant time. As noted above, even if I am wrong about characterising Ms Kougiannis as an independent contractor and she was in fact an employee, that would mean there were 14 employees at the relevant time. In either case, the Respondent was a small business employer, it employed fewer than 15 employees.

[33] I am satisfied that the Respondent is a small business employer within the meaning of s.23 of the Act. In order to be a person protected from unfair dismissal, an employee who was employed by a small business employer must have completed one year of continuous service. It is not in dispute that the Applicant was employed for less than that period. As the Applicant does not meet the minimum period of employment, she is not a person protected from unfair dismissal and the application is therefore dismissed.

[34] An order to that effect will be issued concurrently with this decision.

COMMISSIONER

Appearances:

K Pegler on her own behalf for the Applicant

S Edwards for the Respondent

Hearing details:

2018

Melbourne (Telephone Hearing):

3 April.

Final written submissions:

13 April 2018

Printed by authority of the Commonwealth Government Printer

<PR606853>

 1   Exhibit R1, Statement of Simon Line at [4] and PN46

 2   Exhibit R1, Statement of Simon Line at [6] – [7]

 3   Exhibit A1, Statement of Kathrine Pegler, Appendix R

 4   PN18

 5   PN75 – PN103, PN315 – PN317

 6   Exhibit A1, Statement of Kathrine Pegler, Appendix L

 7   PN66

 8   PN262 – PN264

 9   PN196

 10   PN326

 11   PN327

 12   PN166 – PN167

 13   PN325

 14   PN322 – PN324

 15   Respondent’s outline of Argument: objections, filed 26 February 2018 at [4]

 16   Respondent’s outline of Argument: objections, filed 26 February 2018 at [6]

 17   Respondent’s outline of Argument: objections, filed 26 February 2018 at [7]

 18   Exhibit R1, Statement of Simon Line at [4] and PN46, PN105

 19   PN110

 20   Exhibit R1 Statement of Simon Line at [15], PN48

 21   PN111, PN116 and PN119

 22   PN117

 23   PN301 – PN303

 24   PN120 – PN121

 25   Exhibit R1, Statement of Simon Line at [9], PN121 - PN123

 26   Exhibit A1, Statement of Kathrine Pegler at [40], Appendix R and PN128 – PN133

 27   PN134 – PN138

 28   PN139 – PN140

 29   (140, 241)

 30   PN140, PN240

 31   PN141 – PN144, PN160

 32   PN146 – PN152, PN159

 33   PN237 – PN238

 34   PN222

 35   PN161 – PN163

 36   Hollis v Vabu Pty Ltd (2001) 2017 CLR 21 at [40] citing Marshall v Whittaker's Building Supply Co [1963] HCA 26 (7 August 1963), [(1963) 109 CLR 210, at p. 217]

 37   Jiang Shen Cai trading as French Accent v Michael Anthony Do Rozario (Lawler VP, O’Callaghan SDP, McKenna C, 2 December 2011) at [30], [(2011) 215 IR 235]

 38   Abdalla v Viewdaze Pty Ltd t/a Malta Travel PR927971 (AIRCFB, Lawler VP, Hamilton DP, Bacon C, 14 May 2003) at [34], [(2003) 122 IR 215]; citing Stevens v Brodribb Sawmilling Company Pty Ltd [1986] HCA 1 (13 February 1986), [(1986) 160 CLR 16, at p. 37]

 39   Abdalla v Viewdaze Pty Ltd t/a Malta Travel PR927971 (AIRCFB, Lawler VP, Hamilton DP, Bacon C, 14 May 2003) at [34], [(2003) 122 IR 215]; citing Re Porter [1989] FCA 226 (23 June 1989) at [13], [(1989) 34 IR 179, at p. 184]; Massey v Crown Life Insurance Company [1977] EWCA civ 12 (4 November 1977), [[1978] 2 All ER 576, at p. 579]; approved in AMP v Chaplin [1978] UKPC 7 (14 March 1978), [(1978) 18 ALR 385, at p. 389]

 40   Exhibit R1 Statement of Simon Line at [15] and PN170

 41   PN169 – PN173

 42   PN174 - PN175

 43   PN310 – PN312

 44   PN301

 45   On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366 (13 April 2011) at [201], [(2011) 206 IR 252]

 46   Exhibit A1, Statement of Kathrine Pegler, Appendix S

 47   PN190

 48   Exhibit R1, Statement of Simon Line in response at [2]

 49   PN301