Luke Bramble v Ivicon Australia Pty Ltd T/A Ivicon

[2017] FWC 1893

[2017] FWC 1893

FAIR WORK COMMISSION

DECISION

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

Luke Bramble
v
Ivicon Australia Pty Ltd T/A Ivicon
(U2016/13428)

COMMISSIONER JOHNS SYDNEY, 3 APRIL 2017

Application for relief from unfair dismissal – small business – minimum employment period.

Introduction

[1] On 8 November 2016 Luke Bramble (Applicant) made an application to the Fair Work Commission (Commission) pursuant to section 394 of the Fair Work Act 2009 (FW Act) for a remedy in respect of his dismissal by iVicon Australia Pty Ltd (iVicon/Employer/Respondent).
[2] On 17 November 2016 the Employer filed a response to the unfair dismissal application. In its response it raised an objection to the Commission exercising jurisdiction in relation to the matter on the ground that, it submitted, the Applicant had not completed the minimum employment period (MEP). It further submitted that the MEP was 12 months because, it claimed, iVicon was a small business when it gave notice to the Applicant.

Permission to be represented

[3] Because a jurisdictional objection had been raised the Commission, as presently, constituted, was satisfied that, taking into account the complexity of the matter, allowing the parties to be represented would enable the matter to be dealt with more efficiently. Consequently, both parties were given permission to be represented pursuant to section 596(a) of the FW Act.
[4] At the jurisdictional hearing:

a) the Applicant was represented by Mr R Mimmo, a solicitor. No witnesses were called on behalf of the Applicant,
b) the Respondent was represented by Mr M Kerr, a solicitor. Mr Kerr called Mr Andrew Bosch (the Respondent’s Operations Director) to give evidence on behalf of the Respondent.

Submissions and evidence

[1] In addition to the evidence received and submissions made at the jurisdictional hearing the parties had, prior to the hearing, filed the following material which the Commission, as presently constituted, has had regard to:

a) Form F2 – Unfair Dismissal Application,

b) Submission on behalf of the Applicant (and its annexures) (Exhibit A1),

c) Current & Historical Company Extract for “T C Chung Family Pty Ltd” (Exhibit A2),

d) Current Company Extract for “Bright Path Group Pty Ltd” (Exhibit A3),

e) Termination Letter dated 28 October 2016 (Exhibit A4),

f) Form F3 – Employer’s Response,

g) Respondent’s Submissions (Exhibit R1),

h) Statement of Andrew Bosch (and its annexures) (Exhibit R2), the Respondent’s Operations Director (repetition?) .

Agreed Matters

[1] The following matters were either agreed between the parties or not otherwise substantially contested:

a) The Respondent was registered on 10 September 2014,

b) The two Directors of the Respondent are,

i. Tin Chung Chung (Charles Chung), and

ii. David Sunton.

a) The shareholders in the Respondent are,

i. T C Chung Family Pty Ltd,

A. of which Charles Chung is the Director, and

B. in which Charles Chung and his wife are shareholders, and

i. Bright Path Group Pty Ltd,

A. of which David Sunton is the Director, and

B. in which David Sunton and his wife are shareholders,

a) On 18 November 2015 the Respondent made an offer of full time employment to the Applicant. The offer was signed by Mr Chung as “Managing Director”,

b) On 13 January 2016 the Applicant commenced employment with the Respondent,

c) The Applicant was employed in the position of Business Development Manager,

d) On 28 October 2016 the Respondent terminated the employment of the Applicant. The letter was signed by Mr Chung as “Director” of the Respondent, and

e) The employment was for a period of 9 months 15 days. 1

Protection from Unfair Dismissal

[1] The Applicant submits he was unfairly dismissed and seeks an Order that he be reinstated and or compensated.
[2] An order for reinstatement or compensation may only be issued where the Commission is satisfied the Applicant was protected from unfair dismissal at the time of the dismissal.
[3] Section 382 sets out the circumstances that must exist for the Applicant to be protected from unfair dismissal:

“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 fewer than the high income threshold.

[4] In the present matter the dispute is about whether the Applicant has completed a period of employment with the Respondent of at least the minimum employment period. The Respondent says that period is 12 months because it is a small business employer.
[5] The Applicant disputes that the Respondent is a small business and says the minimum employment period is 6 months (which he served in excess of).
[6] Consequently, the jurisdictional objection depends on whether, on 28 October 2016, the Respondent employed fewer than 15 people (i.e. whether it was a Small Business).
[7] If:

a) the Respondent is a small business the Applicant did not complete the MEP and the jurisdictional objection must be upheld, or

b) if the Respondent is not a small business the Applicant did complete the MEP the jurisdictional objection must be dismissed.

Is the Respondent a Small Business?

[1] To be satisfied that a minimum employment period of 12 months applies to the Applicant the Respondent must be a “small business employer” for the purposes of the Act, which is defined at s.23:

“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.”

[2] The Respondent submits that immediately before the dismissal it was a small business employer within the meaning of s.23 of the Act. It said it employed 13 people (including the Applicant) at the time it gave notice to the Applicant.
[3] In submitting that it was a small business employer at the relevant time (i.e. on 28 October 2016) the Respondent provided the following evidence to establish that fact:

a) Bank Payment details for 1 October 2016 – 31 October 2016 (Annexure A to Exhibit “R2”) containing the names of 12 employees, and

b) Bank Payment details for 1 November 2016 – 30 November 2016 (Annexure B to Exhibit “R2”) containing the names of 12 employees.

[1] The differences between Annexure A and Annexure B were the absence of the Applicant from and the inclusion of James Taggart in Annexure B. Consequently, read together, Annexure A and Annexure B record 13 employees as at 28 October 2016.
[2] Thirteen employees were agreed between the parties as the minimum number of employees employed at the relevant time. 2
[3] The Respondent says that is the end of the matter because there were only 13 employees.
[4] The Applicant submits the Respondent was not a small business employer at the time of dismissal. The Applicant says there were 4 other employees as follows:

a) Charles Chung – Managing Director,
b) David Sunton – Director of Marketing,
c) Meetal Gandhi – full time employee, and
d) Po-An (Zach) Chen – IT/Business Integration and promoted to Head of Strategic Business. 3

(Disputed Employees)

[1] The Respondent denies that any of the Disputed Employees were employees. It submitted that:

a) Charles Chung was a Director (office holder) of the Respondent,
b) David Sunton was a Director (office holder) of the Respondent,
c) Meetal Gandhi was an employee of Pivitol HR Pty Ltd (Pivitol) on labour hire to the Respondent, and
d) Po-An (Zach) Chen was an employee of Skyton Management Pty Ltd (Skyton), but doing work for the Respondent as directed by Mr Chung. 4

[1] The parties agree that if any 2 of the 4 Disputed Employees are found to be employees of the Respondent at the time notice was given to the Applicant then the Respondent is not a Small Business and the jurisdictional objection must fail. 5
[2] The Respondent did not call any of the Disputed Employees to give evidence. Its failure to do so does not necessarily give rise to an adverse inference being drawn against it in accordance with Jones v Dunkel. 6 An unfavourable inference can only be drawn if evidence otherwise provides a basis upon which to do so.
[3] One way that the Respondent could have been put in a position where it was necessary for it to answer or rebut evidence, would have been if the Applicant had given evidence about what he saw the Disputed Employees doing that made them appear more like employees of the Respondent rather than another classification. However, in the present matter the Applicant elected not to lead any evidence. Accordingly, it is difficult to find an evidentiary basis elsewhere in the evidence to support an adverse inference being drawn against the Respondent.
[4] To the extent that the Applicant (through Mr Mimmo) says the Respondent should have put on additional evidence or exhibited additional documents it should be noted that, the Respondent filed its materials on 23 February. Between then and when the hearing occurred on 3 March 2017 the Applicant had ample time to put the Respondent on notice that he thought its evidence was deficient. He had every opportunity to service Notices to Produce documents. He did neither.

Formation of the employment relationship

[5] In Macken’s Law of Employment the authors usefully explain how the contract of employment is formed. Before considering the circumstances each of the Disputed Employees, it is useful to be reminded that,

“before any simple contract [of employment] is enforceable it is subject to the following requirements:

1. There must be an “intention” between parties to create a legal relationship the terms which are enforceable.

2. There must be an offer by one party and acceptance by the other.

3. The contract must be supported by valuable consideration.

4. The parties must be legally capable of making a contract.

5. There must be an absence of vitiating factors.

6. The contract must not be rendered ineffective by reason of conduct which is illegal or contrary to public policy. 7

[1] In relation to the requirement for valuable consideration, the authors correctly observe that,

“Consideration must be possible to be performed and must move from the person who gives the consideration of the person receiving. The requirement of consideration is satisfied even if wages paid by a 3^rd party such as a related service company or agency performing service functions.

In contracts of employment, a promise to perform work in exchange for a promise to be pay wages constitutes a valuable consideration. At common law, payment need not be by way of wages, provided that what the employee receives is received for the performance of work under the contract.” 8

[2] At one point in his submissions Mr Mimmo suggested that it was possible to have a contract of employment not supported by consideration. He said consideration was “not essential.” 9 In support of that proposition he relied upon the decision in Damevski v Guidice and Others.10 Mr Mimmo is wrong and the authority he put forward does not support his contention.

Consideration – were Charles Chung and David Sunton employees?

[3] Mr Bosch is the Respondent’s Operations Director. He has held that role since 29 February 2016. His evidence was that he has a wide range of duties and is responsible primarily for departure planning and execution of the Respondent’s additions as part of its space school program. He also has a range of administrative functions, including responsibility for HR and payroll. He also manages Accounts Payable and is responsible for the Respondent’s customer support operations. 11
[4] By way of background the company started in September 2014. It is in the business of marketing an international study program for space school. In short the Respondent’s business primarily involves taking students from private school to NASA in the USA to attend a two-week learning experience. Mr Bosch described the business as not earning a lot of money at the moment, but rather still being in investment mode. 12 Expenses are funded through the cash-flow of the business and the private wealth of the Directors.13
[5] Mr Bosch gave evidence that Mr Chung and Mr Sunton are Directors of the Respondent. 14 That is also immediately apparent from the ASIC company extracts tabled during the hearing.
[6] At the jurisdictional hearing Mr Bosch gave further evidence that Mr Chung and Mr Sunton:

a) do not:

i. receive remuneration from the Respondent in respect of their attendance at the office,

ii. receive drawings,

iii. receive dividends,

a) are reimbursed for personal expenses (for example travelling). 15

[1] In relation to Mr Chung, Mr Bosch conceded that Mr Chung,

a) was the “person in charge”, but not the person responsible for all the decisions. Mr Bosch explained that, when he started employment with the Respondent, he took over a lot of the duties that Mr Chung had been performing, 16
b) retained the right to “hire and fire” staff and continued to participate in the disciplining of employees. 17

[1] In relation to Mr Sunton, Mr Bosch conceded that Mr Sunton,

a) is known as the Director of Marketing, 18
b) was previously known as the General Manager, 19 and
c) “had his hands in the affairs of the [the Respondent] on a day-to-day basis.” 20

[1] Although it is usually the case that,

a) the position of a director is distinct from that of an employee 21, and
b) a director is the holder of an office (and not in employment), 22

it is well established that a director may also be an employee. Mr Mimmo was correct in submitting that a worker may well be an employee of their own company, “there is nothing to prevent a person being a director, major shareholder and employee of the same company.” 23
[1] However, the prerequisites describe in Macken (about how a contract of employment is formed) must exist. In the present matter, they do not. Although Mr Chung and Mr Sunton are likely capable of making a contract of employment with the Respondent, there is no evidence of:

a) an “intention” between parties to create a legal relationship the terms which are enforceable,

b) an offer by one party and acceptance by the other, or

c) valuable consideration.

[1] Mr Mimmo submitted that nothing prevented Messrs Chung and Sunton being employees as well as Directors. I agree with him. Mr Mimmo further submitted that the “control test” assisted in the analysis, 24 as does the “organisation test”.25 However, how these concepts assisted in categorising Messrs Chung and Sunton as employees was not fully explained. Mr Mimmo’s submissions were not persuasive.
[2] The evidence in this matter suggests that Messrs Chung and Sunton were merely office holders. They were not paid wages or any other form of remuneration payable for the performance of work as an employee. To the extent that they were involved in the business of the Respondent, evenly heavily involved, that involvement is entirely consistent with them being hands-on directors and the controlling minds of the Respondent. It does not cause them to also be employees of the Respondent. They were not.
[3] For these reasons the Commission, as presently constituted, is satisfied that at the time of giving notice, neither Charles Chung nor David Sunton were employees of the Respondent.

Consideration – was Meetal Gandhi an employee?

[4] Mr Bosch gave evidence that Meetal Gandhi:

a) is not and employee of the Respondent, but rather,
b) is employed by Pivotal and is supplied to iVicon under a Temporary Placement Agreement dated 15 September 2016. Annexure D to his witness statement was a copy of the relevant agreement. 26

[1] Mr Bosch also tabled an ASIC company extract for Pivitol. 27 It records that none of the officers nor shareholders of Pivitol are Mr Chung, Mr Sunton or any of the other companies referred above as being associated with Mr Chung or Mr Sunton. There is no evidence of any corporate association between the Respondent and Pivitol.
[2] At the jurisdictional hearing Mr Bosch gave further evidence and conceded that Mr Gandhi,

a) performs the role of Business Development Manager for the Respondent, 28 and

b) generates and follows up on sales leads for the Respondent. 29

[1] Although Meetal Gandhi is likely capable of making a contract of employment with the Respondent, there is no evidence of:

a) an “intention” between parties to create a legal relationship the terms which are enforceable,

b) an offer by one party and acceptance by the other, or

c) valuable consideration.

[1] Mr Mimmo submitted that I should find Mr Gandhi was an employee because iVicon had not provided the contract of employment between Mr Gandhi and Pivotal. However, it was not explained why it should be presumed that iVicon would have the contract between Mr Gandhi and Pivotal. If this was to be an important document, the Applicant could have served a Notice to Produce on either Mr Gandhi or Pivotal for the production of the document. He did not.
[2] There is no evidence of any relationship between Pivotal and iVicon other than one that appears, most likely, to be at arms-length. The reality is that, in the present matter, the relationship between Mr Gandhi and the Respondent was like hundreds of other labour hire arrangements throughout the country. Under these arrangements workers of a labour hire company (in this case Pivotal) are on-hired to a host employer (in this case iVicon) who controls and directs the day-to-day work. However, the host employer does not pay the worker. In this situation there is an absence of consideration between the host employer and the worker and, consequently, no employment relationship can arise. It is an unremarkable of the labour hire industry. The evidence in the present matter is consistent with that typical labour hire arrangement.
[3] The evidence is that there is a labour hire agreement between iVicon and Pivotal and no consideration passes between iVicon and Mr Gandhi. There is simply no evidence or existence of an employment relationship between iVicon and Mr Gandhi. For me to make a finding that Mr Gandhi was an employee of iVicon would require me to invent evidence that does not exist.
[4] For these reasons the Commission, as presently constituted, is satisfied that at the time of giving notice, Meetal Gandhi was not an employee of the Respondent.

Consideration – was Po-An (Zach) Chen an employee?

[5] Because:

a) the Applicant needs 2 out of the 4 Disputed Employees to be found to be an employee in order to invoke the jurisdiction of the Commission, and
b) I have already found that 3 out of the 4 Disputed Employees are not employees of iVicon,

the Applicant cannot get to 15 employees. Therefore, it is unnecessary to consider the situation of Mr Chen. However, for completeness, I do so.

[1] Mr Bosch gave evidence that Po-An (Zach) Chen:

a) is not an employee of the Respondent, but rather,
b) is employed by Skyton under an agreement dated 23 October 2014. Annexure F to his witness statement was a copy of the relevant agreement. 30

[1] Mr Bosch also tabled an ASIC company extract for Skyton. 31 It records that in respect of Skyton:

a) Charles Chung is the Director, and

b) Charles Chung and his wife are the shareholders.

[1] At the jurisdictional hearing Mr Bosch gave further evidence and made a number of concessions under cross examination by Mr Mimmo. Thus it became apparent that, Mr Chen:

a) is employed by Skyton,

b) is employed by Skyton to do work related to its property interests,

c) is physically located at the premises of the Respondent, 32

d) performs a significant amount of work on IT matters for the Respondent 33 (but does not report to Mr Bosch34), and

e) reports to Mr Chung 35

[1] Further, the evidence was that Mr Chung sent an email to iVicon employees advising them of the duties to be performed by Mr Chen (for iVicon). 36
[2] Although Po-An (Zach) Chen) is likely capable of making a contract of employment with the Respondent, there is no evidence of:

a) an “intention” between parties to create a legal relationship the terms which are enforceable,

b) an offer by one party and acceptance by the other, or

c) valuable consideration.

[1] Mr Mimmo submitted that because Mr Chen is performing a lot of work for iVicon he should be treated as an employee of the Respondent. However, that is not legal test. Something more is needed than evidence of work being performed. Labour hire employees perform work for host employers all the time, but because of the absence of consideration (wages) passing from the host employer to the worker, no employment relationship is established. On face value that appears to the arrangement between Skyton and iVicon.
[2] I accept that, out of all of the Disputed Employees, if Skyton:

a) is an associated company of the Respondent (and, on the statutory test it seems unlikely), or
b) is merely acting as a paying agent for iVicon (so that, in truth there is consideration passing between Mr Chen and iVicon),

an argument might be made that Mr Chen is, in truth, an employee of the Respondent (or should be included in the count of employees). However, on the evidence before me, the case has not been made out.

[1] For these reasons the Commission, as presently constituted, is satisfied that at the time of giving notice, Po-An (Zach) Chen was not an employee of the Respondent.
Conclusion
[2] For the reasons set out above the Commission, as presently constituted, is satisfied that immediately before the dismissal, the Respondent employed fewer than 15 employees (specifically, 13 employees).
[3] Consequently, the Commission, as presently constituted, finds the Respondent was a small business employer within the meaning of s.23 of the Act at the time of giving notice to the Applicant.
[4] By reason of the Respondent being a small business employer and the Applicant having worked for the Respondent for fewer than 12 months, the Commission, as presently constituted, is satisfied that the Applicant was not protected from unfair dismissal. Consequently, his application for an unfair dismissal remedy must be dismissed.
[5] An order to this effect will be issued later today.

COMMISSIONER

Appearances:

Mr R Mimmo for the Applicant

Mr M Kerr, for the Respondent

Hearing details:

2017

Sydney

3 March

 1   PN37-40.

 2   PN45-90.

 3   Exhibit A1, para B.(v).

 4   Exhibit R1.

 5   PN102.

 6 (1959) 101 CLR 298.

 7   Sappideen et al, Macken’s law of employment (8th edition, 2016), [4.40].

 8   Ibid, [4.130].

 9   PN387.

 10 [2003] FCAFC 252.

 11   PN113.

 12   PN136.

 13   PN138.

 14   Exhibit R2, para 4.1.

 15   PN119-122.

 16   PN184-187.

 17   PN188-191.

 18   PN195

 19   PN198.

 20   PN202.

 21   Anderson v James Sutherland [1941] SC 203 at 213.

 22   Eaton v Robert Eaton Ltd [1988 ICR 202 at 304.

 23   Exhibit “A1”, page 4.

 24   Ibid.

 25   Ibid, page 5.

 26   Exhibit R2, para 4.2.

 27   Exhibit R2, para 4.3, Annexure D.

 28   PN312.

 29   PN313.

 30   Exhibit R2, para 4.4.

 31   Exhibit R2, para 4.5, Annexure G.

 32   PN230.

 33   PN236 and PN242.

 34   PN240.

 35   PN241.

 36   PN244-249.

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