Mackay and Secretary, Attorney General’s Department
[2020] AATA 4554
•12 November 2020
Mackay and Secretary, Attorney General’s Department [2020] AATA 4554 (12 November 2020)
Division:GENERAL DIVISION
File Number:2020/2206
Re:Geoffrey Mackay
APPLICANT
AndSecretary, Attorney General’s Department
RESPONDENT
DECISION
Tribunal:Senior Member D R Davies
Date: 12 November 2020
Place:Brisbane
The decision under review is affirmed.
........................................................................
Senior Member D R Davies
CATCHWORDS
EMPLOYMENT ENTITLEMENTS – Fair Entitlements Guarantee Act 2012(Cth) – advance paid to employee – reconsideration of own motion by secretary – decision that employee was not eligible for advance paid – whether applicant was an employee of the relevant company or another company – tripartite labour hire agreement – applicant not an employee of the relevant company – decision under review affirmed
LEGISLATION
Fair Entitlements Guarantee Act 2012 (Cth)
CASES
Damevski v Giudice (2003) 133 FCR 438; [2003] FCAFC 252
Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (2011) 198 FCR 174; [2011] FCA 1176
Hollis v Vabu (2001) 207 CLR 21; [2001] HCA 44
Nguyen and A-N-T Contract Packers Pty Ltd (2003) 128 IR 241; [2003] NSWIRComm 1006
On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) (2011) 214 FCR 82; [2011] FCA 366
Plutus Payroll Australia Pty Ltd (in Liquidation), Re (2019) 139 ACSR 536; [2019] NSWSC 1171
Qian and Commissioner of Taxation, Re [2019] AATA 14
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16; [1986] HCA 1
Vij v Cordina Chicken Farms Pty Ltd (2012) 265 FLR 365; [2012] FMCA 483SECONDARY MATERIALS
Administrative Arrangements Order (Cth) made on 29 May 2019
Explanatory Memorandum to the Fair Entitlements Guarantee Bill 2012
REASONS FOR DECISION
Senior Member D R Davies
12 November 2020
INTRODUCTION
The Applicant, Geoffrey Mackay seeks the review of the decision of the Respondent, the Secretary, Attorney General’s Department, that he was not eligible for an advance under the Fair Entitlements Guarantee Act 2012 (Cth).
The issue is whether Mr Mackay was an employee of PPA Contractors Australia Pty Ltd (in Liquidation) or another company in the Plutus Payroll Group of Companies and was eligible for an advance under the Fair Entitlements Guarantee Act 2012 (Cth).
Definitions
In this decision:
·“Department” means the Attorney General’s Department.
·“FEG Act” means the Fair Entitlements Guarantee Act 2012 (Cth).
·“Liquidators” means Timothy Norman, Salvatore Algeri and Ezio Senatore of Deloitte appointed as liquidators of the PP Group pursuant to the order of the Supreme Court of New South Wales on 9 October 2017.
·“Mr Anquetil” means Simon Anquetil from the PP Group.
·“Mr Mackay” means the Applicant, Geoffrey Mackay.
·“Mr Scarano” means Joe Scarano.
·“MJHQ” means MJHQ Pty Ltd ACN 164 461 723.
·“PPA” means Plutus Payroll Australia Pty Ltd (in Liquidation) ACN 169 205 127.
·“PPA Contractors” means PPA Contractors Australia Pty Ltd (in Liquidation) ACN 605 218 273.
·“PPA Services” means PPA Services Australia Pty Ltd (in Liquidation) ACN 605 903 660.
·“PP Group” means the PP Group of Companies listed in the Initial Notification to Creditors by Deloitte dated 3 November 2017 being Annexure A in Exhibit 1 Tribunal Documents T11 page 117.
·“Plutus Payroll Decision” means the decision of the Supreme Court of New South Wales in Plutus Payroll Australia Pty Ltd (in Liquidation) (2019) 139 ACSR 536; [2019] NSWSC 1171.
·“Roni’s” means Roni’s Variety Discounts ABN 73 698 782 844.
·“Secretary” means the Respondent, Secretary Attorney General’s Department.
BACKGROUND
The FEG Act provides for the Commonwealth to make payments of entitlements owed to employees if their employer becomes insolvent. The Commonwealth advances the entitlements of the employees and then seeks to recover the advances from the insolvent employer.
On 16 December 2008, Mr Mackay commenced employment with Roni’s.[1] Mr Mackay has not been able to find a copy of his employment contract at that time. Mr Scarano is the Director, Secretary and sole shareholder of MJHQ, the operating entity of Roni’s.[2]
[1] Exhibit 1, Tribunal Documents, T5, p53.
[2] Exhibit 5, ASIC Search MJHQ.
Mr Mackay mainly worked as the Manager of Roni’s Castle Hill Store in Sydney.
On 19 January 2015, Mr Mackay entered into a Letter of Engagement with Roni’s and PPA.[3]
[3] Exhibit 1, Tribunal Documents, T5.1, p59.
Subsequently, he began receiving payment of his wages via PPA Services.[4]
[4] Exhibit 1, Tribunal Documents, T5.2, p68.
Mr Mackay continued to work as the Store Manager of Roni’s Castle Hill store. His duties included “store opening and closing, customer service, staff rosters and timesheet approval, staff training and development, merchandising (sic), cost control, weekly and monthly reporting, store security, banking and afterhours alarm responses”.[5]
[5] Exhibit 1, Tribunal Documents, T5, p52-53.
On 9 June 2017, Timothy Norman, Salvatore Algeri and Ezio Senatore of Deloitte were appointed Provisional Liquidators of the PP Group.
On 9 October 2017, the Provisional Liquidators were appointed as Liquidators of the PP Group. The Liquidators sent an Initial Notification of Appointment letter to creditors on 3 November 2017 including Mr Mackay.[6]
[6] Exhibit 1, Tribunal Documents, T11, p115.
On 20 June 2017, Mr Mackay lodged his claim online to the Department for an advance under the FEG Act. The claim stated that his employer’s ABN was 63 605 218 273 and that his employer was Plutus Payroll.[7]
[7] Exhibit 1, Tribunal Documents, T5, p49-58.
On 20 September 2017, a delegate of the Secretary decided that Mr Mackay was eligible to receive an advance of $30,740.07 in respect of unpaid employee entitlements under the FEG Act (Eligibility Decision) in respect of his former employer PPA Contractors[8] which was a company in the PP Group.
[8] Exhibit 1, Tribunal Documents, T9, p105-113.
On 26 August 2019, following a review of the Eligibility Decision, pursuant to s37 of the FEG Act, the Secretary decided that Mr Mackay was not entitled to an advance on the basis that he was not an employee of PPA Contractors nor any other PP Group entity for the purposes of meeting the conditions for eligibility for an advance under s10 of the FEG Act.[9]
[9] Exhibit 1, Tribunal Documents, T16, p248.
As a consequence, the Secretary found that Mr Mackay was liable to repay the advance he had received (Review Decision).
Mr Mackay sought review of this decision pursuant to s38 of the FEG Act on 20 September 2019.[10]
[10] Exhibit 1, Tribunal Documents, T18, p262-270.
On 12 March 2020, the Secretary, pursuant to s39(1) of the FEG Act affirmed the review decision determining that Mr Mackay was not an employee of PPA Contractors or a company in the PP Group (Reviewable Decision).[11]
[11] Exhibit 1, Tribunal Documents, T24.
On 7 April 2020, Mr Mackay made Application to the Administrative Appeals Tribunal for review of this decision.[12]
[12] Exhibit 1, Tribunal Documents, T1, p2.
ISSUES
Mr Mackay contends that he was an employee of a company in the PP Group. The Respondent contends that he was not an employee of PPA Contractors nor any other company in the PP Group. The Respondent contends that Mr Mackay was an employee of Roni’s and that he was not eligible to receive an advance under the FEG Act. The issues in contention in this Application are therefore whether Mr Mackay was an employee of PPA Contractors or any other company in the PP Group for the purposes of the conditions of eligibility for an advance under s10 of the FEG Act.
The Respondent in its Statement of Facts Issues and Contentions concedes that if the Tribunal finds that Mr Mackay was an employee of a PP Group Company, that the other eligibility conditions prescribed by s10 of the FEG Act will be satisfied.[13]
[13] Exhibit 2, Respondent’s Statement of Facts Issues and Contentions, paragraph 2.2.
LEGISLATIVE PROVISIONS
The relevant provisions of the FEG Act are in s10, which sets out the conditions of eligibility for an advance.
Relevantly:
·Paragraph 10(1)(a) requires the person’s employment to have ceased;
·Paragraph 10(1)(c) requires the end of employment to be due to the insolvency of the employer or within 6 months before the appointment of an insolvency practitioner for the employer;
·Paragraph 10(1)(d) requires that the person is owed one or more debts attributable to employment entitlements;
·Paragraph 10(1)(f) requires that if the person was owed any of the debts before the insolvency event happened, the person took reasonable steps before that event to be paid those debts;
·Paragraph 10(1)(h) also requires an effective claim to be made in accordance with s14. Relevantly, s14 requires a claim to be made in the form approved by the Secretary and within 12 months of the insolvency event of the employer.
Whilst s5 of the FEG Act defines “employer” as “including the former employer”, “employee” or “employment” are not defined within the FEG Act.
Paragraph 4 of the Explanatory Memorandum to the Fair Entitlements Guarantee Bill 2012 states:
For the purposes of the scheme, the term “employee” refers to an employee at common law and does not include contractors.
Subsection 37(1) of the FEG Act, provides that if the Secretary is satisfied there is sufficient reason, the Secretary may review a decision whether a person is eligible for an advance or a decision on the amount of an advance a person is eligible for.
Subsection 37(4) of the FEG Act provides that after reviewing the decision, the Secretary may set aside the decision that was reviewed and substitute a new decision.
Section 38 of the FEG Act provides for a person to apply for an internal review by the Secretary of a decision whether a person is eligible for an advance or on the amount of the advance.
Section 40 of the FEG Act provides that a person may apply to the Administrative Appeals Tribunal for the review of a decision by the Secretary whether the person is eligible for an advance that has been affirmed or substituted for an earlier decision.
It should be noted that pursuant to Administrative Arrangements Order (Cth) made on 29 May 2019, the Attorney General’s Department administers the FEG Act.
Accordingly, it is necessary to assess whether Mr Mackay was an employee of PPA Contractors or any other PP Group Company at common law for the purposes of consideration of his entitlement for an advance under the FEG Act.
EMPLOYEE AT COMMON LAW
The traditional approach to the characterisation of an employer/employee relationship was to apply a control test. In Stevens v Brodribb Saw Miling Co Pty Ltd[14], Mason J, with whom Brennan J (at 47) and Deane J (at 49) relevantly agreed, addressed the factor of control and the issue of characterisation generally, as follows (at 24):
A prominent factor in determining the nature of the relationship between a person who engages another to perform work, and the person so engaged is the degree of control which the former can exercise over the later. It has been held, however, that the importance of control lies not so much in actual exercise, although clearly that is relevant, as in the right of the employer to exercise it….
But, the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this Court has been to regard it merely as one of a number of indicia which must be considered in the determination of that question….
[14] (1986) 160 CLR 16; [1986] HCA 1.
Mason J went on to state (at 29):
Control is not now regarded as the only factor. Rather, it is the totality of the relationship between the parties which must be considered.
In On-Call Interpreters and Translators Agency Pty Ltd v Federal Commissioner of Taxation (No. 3)[15], Bromberg J said (at para 204):
Despite the earlier preoccupation of the law with a degree of control exercised by the putative employer as defining an employment relationship, the modern approach is multi-factorial. As the majority said in Hollis[16] it is:
‘The totality of the relationship which is to be considered’.
[15] (2011) 214 FCR 82; [2011] FCA 366 (On-Call Interpreters).
[16] Hollis v Vabu (2001) 207 CLR 21 [24].
Whilst the issue in On-Call Interpreters was whether the person was an employee or an independent contractor, there were some relevant statements as to the analysis to be undertaken in relation to the totality test. Bromberg J stated at (para 209):
The control test has two elements. The first is whether the person has a business. The second is whether the work or the economic activity being performed is being performed in and for the business of that person.
Bromberg J went on to set out indicia for consideration as to in whose business the economic activity is being performed, which relevantly included (at para 218):
Does the provision of the economic activity provide an opportunity for profit and involve the risk of loss?.....
Does the putative business or the putative employer’s business control and direct or have the capacity to control and direct the manner in which the economic activity is carried out?.....
Is the economic activity represented or portrayed as the activity of the putative business or that of the putative employer’s business?....
To what extent is the person providing the economic activity integrated with the business receiving the activity?....
To what extent is the person providing the economic activity financially self-reliant from, as opposed to, economically dependent upon or organisation tied to the business receiving the activity?....
Exclusivity is suggestive of an employment relationship….
Is the person providing the economic activity free to employ his or her own means……to produce the activity or must that person personally perform the work?....
To whose business does any goodwill created by the economic activity enure?....
In contracting to provide the economic activity, has the person agreed to provide an outcome or result?....
To what extent is the person providing the economic activity doing so with his own tools or equipment?....
Have the parties involved characterised the economic activity as that of the owner/entrepreneur being performed in, and for that person’s business, or alternatively as part of the receiving business and to what extent does that characterisation reflect the reality?...” (at para 220):
In many respects the indicators are differently expressed to accommodate the particular approach that I have taken …..which seeks to emphasize what I have described as the control question in the totality test. The indicators listed are not intended to be exhaustive and many of them will be the subject of qualification depending on the nature of the economic activity in question and the circumstances in which it has been carried out.
In Damevski v Giudice[17] the Full Court of the Federal Court was considering a labour hire arrangement. Marshall J stated that (at para 76):
There are a few recent examples of cases concerning labour hire arrangements in which either contractual relationships have been found between a worker and the “host employer” or where the concept of dual employment has been entertained.
He went on to state (at para 77):
The need to look ‘beyond and beneath the document’ and not reach a decision concerning the existence of an employment control on the basis of construing the correspondence.
[17] (2003) 133 FCR 438; [2003] FCAFC 252 (Damevski).
In Damevski, Merkel J stated (at para 172):
I have concluded that notwithstanding the labels employed in the relevant documents, the ‘real substance’ of the Endoxos and Damevski Agreements was that AICA/MLC’s role in the relationship between Endoxos and its former employees, was that it acted as agent for both parties in creating privacy of contract between them. The reasons for that conclusion are:
1.Under the respective agreements entered into by Endoxos in respect of all of its employees….those employees were to be employed precisely as they had been previously so that the arrangements for paper were to differ at least as a result of the interposition of AICA/MLC as a conduit for payment of the new rates of pay payable to the employees…..In any event……payment by an ‘intermediary’ is not fatal to the existence of an employment relationship between the contractor and the putative employer….
2.Endoxos, rather than AICA/MLC, made all of the specific arrangements relating to Damevski’s re-engagement to work as a cleaner for it…..Endoxos determined and informed Damevski about where, when and how he was to work under the Damevski agreement and how much he was to be paid for that work….
3.All of the relevant features of Damevski’s employment, save for the manner and quantum of payment remained unchanged….I am satisfied that the common intention of the parties viewed objectively, manifested by their words and conduct was that Damevski was to be re-employed by AICA/MLC acting as agent on behalf of Endoxos and Damevski. Save for AICA/MLC’s role in respect of payment, the evidence does not establish that it was to have any role as principal in relation to Damevski’s employment relationship within Endoxos as from 19 August 2001. That conclusion is also consistent with the commercial circumstances surrounding the communications and the subjective matter of those communications. Those circumstances and that subject matter can be simply stated as Endoxos requiring that its workforce and their work continuing in all respects as before save that the workforce performed that work as independent contractors. The failure of Endoxos to achieve the outcome was a result of the parties not having the legal capacity to determine the nature of their contractual relationship by the use of labels that do not accord with the real substance of the relationship.
Merkel J went on to state (at para 173):
In general, the Courts have held that the interposition of a labour hiring agency between clients and the workers it hires out, does not result in an employee-employer relationship between the client and the worker…..(at para 174), however the present case differs in significant respects from those cases. In those cases, in general, the hiring agency interviewed and selected the workers, and determined their remuneration without reference to the client. Usually a client requesting a worker with particular skills was provided with……the workers of such hiring agencies were usually meant to keep the agency informed of their availability to work and in many cases were not to agree to undertake work for the client which had not been arranged or directed by the hiring agency…..Dismissal of a worker was only able to be affected by the hiring agency. The client can only advise the hiring agency that the particular worker is no longer required by it. Had AICA/MLC acted as a labour hiring agency for Damevski to contract his services to other cleaning companies…..then the decisions in the above cases may have been applicable to this situation. However that did not eventuate in the present case.
The parties have referred to the Plutus Payroll Decision which was a decision of the Supreme Court of New South Wales on an application by the liquidators of the PP Group that they would be justified in determining that claims submitted by a specified persons in the liquidations of the companies are not claims by employees of the companies. The Court made orders that the liquidators (at para 38):
Would be justified in determining that claims in the liquidation of the Companies submitted by … ‘Workers’ are not claims by employees…..of the Companies if:
(a)The Companies operated only a payroll service business and were contracted to provide payroll services to external clients; and
(b)The Workers were listed on the Company’s payroll system maintained for the purpose of operating the Company’s payroll service business; and
(c)The Workers have confirmed to the Liquidators (or the Liquidators are otherwise satisfied), that during the period in which they were paid by one of the Companies:
(i)They provided services to a business other than one of the Companies; and
(ii)They were not introduced to that business by one of the Companies; and
(iii)They never attended the premises of any one of the Companies; and
(iv)They did not report to any representative of the Companies including on a day-to-day basis;
(v)If the Worker took a planned or unplanned absence from work, they did not notify a representative of the Companies about the absence; and
(vi)If the Worker indicated that they received feedback about their work performance, they did not receive this feedback from a representative of the Companies; and
(vii)The length of their placement or contract (whether it was extended or ceased early) was not determined by one of the Companies; and
(viii)The rate of pay, pay frequency and method of payment, or the negotiation and agreement in relation to pay, was not determined or undertaken solely by one of the Companies; and
(ix)The Worker appears to have entered into a Payroll Services Agreement with one of the Companies which provided that the Worker was not an employee of any one of the Companies.
Whilst the indicia set out in those orders are matters to be considered in the present case, I do not consider that they are determinative of the issues in the present case. They are matters to justify decisions which may be made by the Liquidators in respect of specific workers in connection with the conduct of the liquidation.
The Respondent, in its Statement of Facts Issues and Contentions[18] at paragraph 3.3, has referred to a number of cases which have identified a variety of indicia to be assessed in considering the totality of the relationship between the putative employer, the host business and the labour hire company.[19] Having regard to those cases and the other cases to which I have previously referred, I consider that the matters set out by the Respondent are appropriate to consider as part of the totality of the relationship between the parties. Those matters are:
[18] Exhibit 2, Respondent’s Statement of Facts, Issues and Contentions.
[19] Damevski; Nguyen and A-N-T Contract Packers Pty Ltd (2003) 128 IR 241; [2003] NSWIRComm 1006 (Nguyen); Re Qian and Commissioner of Taxation [2019] AATA 14 (Qian); Fair Work Ombudsman v Ramsey Food Processing Pty Ltd (2011) 198 FCR 174; [2011] FCA 1176 (Ramsey);Vij v Cordina Chicken Farms Pty Ltd (2012) 265 FLR 365; [2012] FMCA 483 (Cordina).
(a)The role of the labour hire company and whether it acts as an intermediary between the clients and workers[20];
(b)The role of the labour hire company and whether it merely acts as an ‘agent’ of the employer[21];
(c)The legal contractual relationship between the worker and the labour hire company[22] ’bare formalities’ are not sufficient[23] and ‘self-characterisation ‘ is not always determinative[24];
(d)The working relationship between the worker and the labour hire company[25];
(e)The practical and legal control exercised over the worker[26];
(f)Who bears the rights and characteristics of an employer – the labour hire company, or its client[27];
(g)Who the worker was hired by[28];
(h)The fixing and paying of remuneration[29]; and
(i)The worker’s state of mind.[30]
[20] Damevski at [174].
[21] Damevski; Ramsey at [120]
[22] Damevski; Qian at [104].
[23] Ramsey at [94], [98].
[24] Qian at [96].
[25] Damevski at [71].
[26] Damevski at [68]; Cordina at [62].
[27] Damevski at [102]; Ramsey at [98].
[28] Damevski at [174]; Ramsey at [68-69] and Nguyen.
[29] Damevski at [6], [174]; Qian at [102].
[30] Cordina at [61-63].
FACTS
The evidence before the Tribunal comprises the eight exhibits which were admitted by the consent of the parties which include Exhibit 1 the Tribunal Documents. The hearing was conducted by Microsoft Teams in accordance with the Tribunal’s Practice Direction - Covid-19 Special Measures Practice Direction - Freedom of Information, General and Veterans’ Appeals Divisions.[31] Mr Mackay appeared at the hearing and gave evidence to the Tribunal under affirmation. In giving his evidence, he impressed me as an articulate and honest witness. The handwritten submissions which he made orally to the Hearing are Exhibit 8.
[31] The Hon Justice D G Thomas, President, 27 April 2020.
Mr Mackay gave evidence that he commenced working for Roni’s on 16 December 2008. He said there was an employment contract at that time between him and Roni’s but he has been unable to find a copy of it. He said that there were two Roni’s stores in Castle Hill and that he oversaw both of them.
Mr Mackay said that in January 2015, Mr Scarano, who owned Roni’s, told him that Roni’s had transferred all its employees over to Plutus under labour hire agreements and that he would be offered an employment contract and all entitlements and remuneration would be the same or similar. Mr Mackay said that Scarano was vague about transferring the business over to the Plutus Group and said that:
You will get a contract from Plutus. If you are happy with it, sign it, if not walk away.
Subsequently, Mr Anquetil from the PP Group brought the Letter of Engagement to him at the store. Mr Anquetil spoke to Mr Mackay in the presence of Mr Scarano. He discussed what was happening with Mr Mackay and explained what his duties were as set out in the Letter of Engagement.
Subsequently on 19 January 2015, Mr Mackay said he signed the Letter of Engagement. He said that Mr Anquetil called around at a later time and picked up the signed Letter of Engagement. Mr Mackay said that he does not have a signed copy of a Letter of Engagement, only the unsigned copy which is Exhibit 1 Tribunal Documents T51 page 59 (Letter of Engagement). Mr Mackay said that under the Letter of Engagement his salary was $60,000.00 per annum which was an increase on the $55,000.00 per annum he had previously been receiving. He said that the bonus scheme which the Letter of Engagement provided for was also new but otherwise the terms were the same or similar to those under which he had been working. Mr Mackay said that the Letter of Engagement was the only contract which he had. He said there was no contract just between him and Plutus.
I note that the Letter of Engagement has the logos of Plutus Payroll and Roni’s Variety Discounts at the top of each page. It begins:
Private and Confidential
Roni’s Discount Variety Stores
Villawood NSW 2163
Dear Geoff Mackay,
Re: Letter of Engagement
I am pleased to offer you employment in the position of Roni’s Discount Variety Stores (‘the manager’) under Labour Hire through our hiring partner Plutus Payroll Australia Pty Ltd (‘the employer’) on the terms and conditions set out in this letter….”
Clause 1 of the Letter of Engagement provides:
1.1 Your start date is the 19th January 2015;
1.2 Your employment will be fulltime;
1.3The duties of this position are set out in the attached position description. You will be required to perform these duties and any other duties the manager or employer may assign to you, having regard to your skills, training and experience;
1.4You will be required to perform your duties primarily at the location set out in the attached schedule, or as reasonably directed by the manager or employer.
Clause 5.3 of the Letter of Engagement provides:
Your remuneration will be reviewed annually and may be increased at the discretion of the manager and/or employer.
Clause 5.4 provides:
5.4 Monies Owing
The employer under direction from the manager, reserves the right to deduct any monies owing to the manager before your remuneration is processed.
Clause 7 of the Letter of Engagement provides:
7. Your obligations to the manager and employer:
7.1 You will be required to:
(a) perform all duties to the best of your ability at all times;
(b)use your best endeavours to promote and protect the interests of the employer; and
(c)follow all reasonable and lawful instructions given to you by the employer, including complying with policies and procedures as amended from time to time. These policies and procedures are not incorporated into your contract of employment.
Clause 8 provides:
8. Termination of Employment
8.1Under the Fair Work Act 2009, the employer or manager may terminate your employment at any time by providing you with notice in writing….
The concluding paragraph of the Letter of Engagement states:
If you have any questions about the terms and conditions of employment, please don’t hesitate to contact Roni’s HR Manager via email.
The Letter of Engagement concludes:
To accept this offer of employment, please return a signed and dated copy of this letter to me by 23 January 2015.
Yours sincerely
Simon Anquetil
Plutus Payroll Australia Pty Ltd
Joe Scarano
Roni’s Variety Discount Stores
I, Geoff Mackay have read and understood this letter and accept the offer of employment from Roni’s Discount Variety Stores on the terms and conditions set out in this letter.
Signed:
Print Name: Date:
Attached to the Letter of Engagement is a schedule with Position Description:
Position Title: Manager
Primary Castle Hill
Responsibilities:
- Assisting with all aspects of running the store
- Specific duties including but not limited to:
o Store opening and closing
o Staff rosters and timesheet approval
o Staff training and development
o Merchandising and ticketing
o Cost control
o Shrinkage control
o Stocktaking
o POS Systems
o Daily Weekly and Monthly reporting
o Store Security
o Afterhours Alarm Response
o Daily Banking
The schedule also has the Remuneration Schedule:
Salary of $60,000.00 gross per annum.
Also attached to the Letter of Engagement is a “Computer, Internet, Usage Policy” which relevantly provides:
This Internet Usage Policy applies to all employees of Roni’s Variety Discount Stores. Use of the Internet by employees of Roni’s Variety Discount Stores is permitted…
Company employees are expected to use the internet responsibly.
All internet data……is considered to belong to Roni’s Variety Discount Stores….
The equipment, servers and technology used to access the Internet are the property of Roni’s Variety Discount Stores….
It has provision at the end of the Policy, for it to be signed by the employee with the following:
(Employee) hereby acknowledge that I accept the above terms as a condition of my employment with Roni’s Variety Discount Stores Pty Ltd.
Also attached to the Letter of Engagement is a “Health and Safety Policy” which begins:
Roni’s Variety Discount Stores are committed to providing a safe workplace.
This Policy at the end states that it is authorised by Mr Scarano and has provision for it to be signed by the employee.
The Exhibit 1 Tribunal Documents include:
(a)A PAYG payment summary for Mr Mackay for the year ending 30 June 2016[32] which sets out the Payer Details as:
[32] Exhibit 1, Tribunal Documents T52, page 68.
Payers ABN 90 605 903 660
Payers Name: Roni’s Discount Variety Stores (via ACN 605 903 660).
It is signed by authorised person: Joe Scarano.
(b)A payslip for Mr Mackay for the period 1/5/2017 to 7/5/2017[33] which has the Roni’s Variety Discount’s logo on it and the heading:
Roni’s Discount Variety Stores (via ACN 605 903 660)
ABN: 63 605 218 273.
(c)A payslip for Mr Mackay for the period 8/5/2017 to 14/5/2017[34] which has Roni’s Variety Discount’s logo on it and the heading:
Roni’s Discount Variety Stores (via ACN 605 903 660)
ABN: 63 605 218 273.
[33] Exhibit 1, Tribunal Documents T53, page 69.
[34] Exhibit 1, Tribunal Documents T5.4, page 70.
Mr Mackay gave evidence that he obtained his payslips by logging into this account on the Plutus Internet Site using his home computer. I note that ACN 605 903 660 is that of PPA Services Australia and ABN 63 605 218 273 is that of PPA Contractors Australia Pty Ltd[35]. Mr Mackay said that at that time he was not aware what this ACN and ABN related to.
[35] Exhibit 1, Tribunal Documents T5.7, page 75.
Mr Mackay gave evidence that on a day-to-day basis he was answerable to Roni’s, usually Mr Scarano. He said that he was not involved in any performance reviews of team members as most of the team were employed on a casual basis.[36] He said that if issues arose at the store he would try to resolve them himself through Roni’s if it was regarding day-to-day store operations or Plutus on any other serious matters.[37] Mr Mackay said that if there was a dispute involving staff, he would try to resolve it himself and if he couldn’t, he would go to Mr Scarano sometimes. On a few rare occasions where he couldn’t resolve something himself, he would go to Plutus and someone from Plutus would come out with Mr Scarano to resolve it. Mr Mackay said that there might have been a couple of occasions where staff had been paid short because he had made a mistake doing the timesheets and he would speak to Mr Anquetil or someone in the Plutus Payroll Department to resolve those matters.
[36] Exhibit 3, Applicant’s Submission 24 July 2020.
[37] Exhibit 3, Applicant’s Submission 24 July 2020.
Mr Mackay gave evidence that, prior to January 2015, he had mainly worked at the Castle Hill store, although on a view occasions he had worked at other stores for short periods. After January 2015 he said that he only worked at the Castle Hill store.
Mr Mackay stated that he would report weekly and monthly sales to PPA and Roni’s for the bonus to be issued.[38] In his evidence he said that he may have received a couple of bonus payments. He said that the bonus was $200.00 if he achieved certain sales criteria. He said that he mainly dealt with Mr Scarano in relation to bonus entitlements.
[38] Exhibit 4, Applicant’s Witness Statement 9 July 2020, Item 10.
Mr Mackay stated that for day-to-day operations he reported to, and sought approval for any issues from, Mr Scarano. All integration at Roni’s with PPA was performed by Mr Scarano.[39] He also stated that the only person from PPA that he can remember is Mr Anquetil who visited the store several times, mainly to communicate with Mr Scarano in relation to this store and other Roni’s stores.[40]
[39] Exhibit 4, Applicant’s Witness Statement 9 July 2020, Item 12.
[40] Exhibit 1, Applicant’s Witness Statement 9 July 2020, Item 14.
In his claim under the FEG Act, Mr Mackay stated that the last day he worked for Plutus was 14 May 2017.[41] Following this, the PP Group went into liquidation. He stated that:
I have never received termination certification as ppa contractors they went into liquidation first, Roni’s paid me for a couple of weeks prior to the store closing as it was the end of the lease at that stage as well.[42]
[41] Exhibit 1, Tribunal Documents, T5, page 53.
[42] Exhibit 1, Tribunal Documents, T14, page 242.
Mr Mackay gave evidence that following this, Mr Scarano asked Mr Mackay to work for him as a store was being closed because the lease had come to an end and he needed assistance to close it down. Mr Mackay said that he worked for Roni’s doing this for about 2 weeks and was paid directly by Roni's for that period.
On 21 December 2017, the Liquidators delivered their initial report to creditors. The report noted relevantly that:
·PPA was the main entity and the trading business.
·PPA would offer their payroll services to workers either directly or through a number of recruitment agencies…..
·Under one scenario a worker would submit their timesheet to PPA who calculated all employment related entitlements, the total value of which would be invoiced from PPA to an intermediary ……or the entity where the worker performed services.
·Once PPA received payment, PPA would then transfer the funds to one of the BOTS (PPA’s second tier companies);
·When BOTS received the funds, their role was to arrange payment to Workers and other regulatory bodies.[43]
[43] Exhibit 1, Tribunal Documents, T12 page 177.
As I previously mentioned, in his FEG claim Mr Mackay stated that his former employer’s ABN was 63 605 218 273 which is that of PPA Contractors and that the name of his former employer was Plutus Payroll.[44] In his evidence, Mr Mackay said that he got that ABN from his payslip and he put the name Plutus Payroll because that was the name on his contract.
[44] Exhibit 1, Tribunal Documents, T5, page 52.
CONSIDERATION
The Respondent contends that, having regard to the entirety of the relationship between PPA Contractors (and the PP Group) and Mr Mackay, the Tribunal should not be satisfied that Mr Mackay was an employee of PPA Contractors nor any PP Group company and, rather, the Tribunal should be satisfied he was an employee of Roni’s.[45]
[45] Exhibit 2, Respondent’s Statement of Facts Issues and Contentions paragraph 6.1.
Mr Mackay contends that under the Letter of Engagement, PPA retained the ultimate right of control of him as its employee by way of its contractual right to set hours of work, assign work duties and job location and the right to terminate his employment. He contends that he worked for the direct benefit of PPA as its employee.[46] In his submissions to the Tribunal, Mr Mackay also contended that all of the criteria in the Plutus Payroll decision for a finding that a worker was not an employee of PPA were not met in his case and that he was an employee of PPA.[47]
[46] Exhibit 1, Tribunal Documents, T18, page 264, paragraphs 19 and 20.
[47] Exhibit 8, Submissions of Applicant.
Letter of Engagement
I will firstly consider the terms of the Letter of Engagement. As I have mentioned earlier, the Letter of Engagement:
·“States that the offer of employment is ‘in the position of Roni’s Discount Variety Stores (‘the Manager’) under Labour Hire through our hiring partner Plutus Payroll Australia Pty Ltd (“the employer”)”.
·Roni’s is described as “the manager” and PPA as “the employer”:
·Provides that the manager and/or employer reviews remuneration;
·Obligations are stated to be owed to the manager and employer;
·The employer or manager may terminate employment;
·It is signed by each of Mr Anquetil of PPA and Mr Scarano of Roni’s;
·It refers to the offer of employment as being from Roni’s and the computer internet and email usage policy and health and safety policy refer only to Roni’s and employees of Roni’s;
·The computer internet and email usage policy has an acknowledgment signed by the employee that acceptance of the policy is a condition of employment with Roni’s.
I consider that the terms of the tripartite Letter of Engagement, despite the use of the terms ‘manager’ to describe Roni’s and ‘employer’ to describe PPA, do not clearly establish that Mr Mackay is an employee of PPA. In fact, the matters referred to in the previous paragraph suggest that the employer is Roni’s and that PPA is Roni’s “hiring partner” and is probably acting as agent of Roni’s in relation to payroll matters. There is no other agreement between any of the parties.
Totality of Relationship
It is therefore appropriate to consider the totality of the relationship between Mr Mackay, Roni’s and PPA having regard to the matters to which I have referred in previous decisions of the Courts to ascertain the real substance of the arrangement.
Control
Under the Letter of Engagement, Mr Mackay’s duties are ascertained by the manager or employer. His work cycle is as agreed between himself and the manager. His remuneration may be increased at the discretion of the manager and/or employer. Obligations are said to be to the manager and employer. The employer or manager may terminate his employment. It appears that control under the Letter of Engagement is shared between Roni’s and PPA.
On a day-to-day operational basis, Mr Mackay reported to Mr Scarano and issues involving the Roni’s business were resolved with Mr Scarano apart from some payroll and staff matters which were resolved with Mr Scarano of Roni’s and Mr Anquetil of PPA and only rarely by Mr Anquetil. Roni’s had operational and practical control over Mr Mackay and the work he performed.
Remuneration Arrangements
Whilst the Letter of Engagement is between Mr Mackay, Roni’s and PPA, it appears from the PAYG Payment Summary[48] and payslips[49] that the Payer of Mr Mackay’s income was described as: “Roni’s Discount Variety Store via ACN 605 903 660” which is PPA Services. This suggests that Mr Mackay was paid his remuneration by Roni’s via its agent PPA Services. Mr Mackay’s entitlement to a bonus was determined in accordance with Roni’s performance criteria relating to sales performance.
[48] Exhibit 1, Tribunal Documents, T52, p 68.
[49] Exhibit 1, Tribunal Documents, T53 and 54, pp 69-70.
Work Performed
Mr Mackay had been working for Roni’s as store manager, mainly at the Castle Hill store, for 7 years prior to 19 January 2015. The arrangement put in place by Roni’s with PPA in January 2015 was not a transfer of business of Roni’s which remained under the management and control of Mr Scarano, the director and shareholder of MJHQ, the company which operated the Roni’s business.
The work with which Mr Mackay performed at Roni’s after 19 January 2015 was the same as, and a continuation of, that which he had performed prior to that date.
Role of Labour Hire Company
Mr Mackay was informed by Mr Scarano in January 2015 that he was being transferred to PPA under a labour hire arrangement. Mr Mackay was not interviewed for employment by PPA. PPA did not select Mr Mackay for employment by it. Mr Mackay did not have a separate agreement with PPA nor any PPA Group Company.
The work which Mr Mackay performed was exclusively for Roni’s and his employment at Roni’s was fulltime. He did not perform any work for any other entity. He did not provide his services to any other entity at the direction of PPA.
In the present case, Mr Mackay was not separately engaged by PPA and then supplied by it to the host business Roni’s. The exclusivity of his work with Roni’s suggests that he was an employee of Roni’s.
Integration
The work which Mr Mackay performed was part of, and integral to, the business of Roni’s. He was presented as Roni’s store manager.
He was integrated into the business of Roni’s. Apart from his payroll arrangements, he was not otherwise involved with PPA in the PP Group. He was neither integral to, nor integrated into, the business of PPA nor any PP Group company.
The goodwill which Mr Mackay created by the performance of his worker store manager enured to the benefit of Roni’s. It did not benefit PPA.
CONCLUSION
Having regard to the matters referred to above and the real substance and totality of the relationship of the parties, in the present case I am satisfied that in performing the work for Roni’s in the period between 19 January 2015 and 14 May 2017 Mr Mackay was not an employee of PPA nor any company in the PP Group.
I am satisfied that during this period the true nature of the relationship between the parties was that Mr Mackay was the employee of Roni’s.
I find that for the purposes of s10 of the FEG Act, Mr Mackay was not an employee of PPA nor any company in the PP Group at the time his employment ended on 14 May 2017. I find that Mr Mackay was therefore not eligible for an advance under s10 of the FEG Act.
I appreciate that this decision may cause Mr Mackay some hardship. It was reasonable for Mr Mackay to believe that he was an employee of PPA or a PP Group Company when he made his claim under the FEG Act because the Letter of Engagement referred to PPA as his employer.
It is most unfortunate that through no fault on the part of Mr Mackay the review by the Secretary of the Eligibility Decision did not occur until some two years after that Eligibility Decision was made and pursuant to which Mr Mackay received the advance. The Secretary may wish to consider these matters in relation to any arrangements made for repayment of the advance.
It follows that the application for review is unsuccessful. Therefore, the decision under review is affirmed.
I certify that the preceding 84 (eighty-four) paragraphs are a true copy of the reasons for the decision herein of Senior Member D R Davies
........................................................................
Associate
Dated: 12 November 2020
Date of Hearing: 21 October 2020 Applicant: Self-represented, by Microsoft Teams Solicitor for the Respondent: Ms Laura Crick, Clayton Utz, by Microsoft Teams
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