Michael Basson v Harris Products Group (Hge Pty Ltd)
[2019] FWC 5199
•2 AUGUST 2019
| [2019] FWC 5199 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Michael Basson
v
Harris Products Group (HGE Pty Ltd)
(U2019/4004)
DEPUTY PRESIDENT BEAUMONT | PERTH, 2 AUGUST 2019 |
Application for an unfair dismissal remedy – minimum employment period – whether respondent small business – not a small business – minimum employment period 6 months – minimum employment period served
[1] Mr Basson lodged an application for an unfair dismissal remedy having been dismissed by way of redundancy from his position as the WA Distributor Support Manager for HGE Pty Ltd t/as Harris Products Group (HGE). HGE objected to the application on the basis that Mr Basson had not satisfied the minimum employment period. It contended that as a small business employer, with fewer than 15 employees, the minimum period was 12 months. Mr Basson disputed that HGE was a small business employer and asserted the minimum employment period was 6 months, a period of service he had completed immediately before his dismissal. This decision deals with the objection that Mr Basson had not completed the minimum employment period and therefore was not protected from unfair dismissal.
Background
[2] It was uncontentious that Mr Basson commenced working for HGE on 7 May 2018, and his dismissal took effect on 19 March 2019.
[3] At the time of his dismissal Mr Basson stated that HGE and Harris Products Group New Zealand (Harris NZ) were associated entities. While Mr Basson attempted to draw into that net Harris Products Group USA, he provided no evidence to support the assertion that it was a related entity, which was vigorously disputed by HGE. The relationship between HGE and Harris NZ is further considered at paragraphs [15] to [20] of this decision.
[4] Mr Basson gave evidence that there were thirteen employees in HGE and four employees working in Harris NZ. 1 He based his evidence on both his recollection of having come across the employees whilst working for HGE, and his notes. It was difficult to ascertain whether his recollection was contemporaneous and correct as at the time his dismissal took effect. Included in the list were two names that Mr Chadkirk, Director of HGE, submitted were directors and therefore not included in the employee count. One was Mr Chadkirk himself, and the other, a Ms Rankin.
[5] HGE submitted that it had 11 employees at the relevant date, but neither Mr Chadkirk nor Ms Rankin were included in its count. The evidence was that there were three employees within the Harris NZ team, and one contractor.
[6] The person purported to be a contractor, a Ms Knight, gave evidence that she provided graphic design support for Harris NZ in the form of updating three websites, producing flyers and catalogues, and would submit any hours worked each fortnight to Harris NZ. 2 Ms Knight said she provided similar services to past an ongoing customers such as Ray White Real Estate, Wanganui 4500 – Whanganui Chronical Advertising, Gilded Imports and Steampunk Whanganui.3
[7] Ms Rankin gave evidence that she was a director of six companies including HGE. She said that she had spent 16 years working for HGE and Harris NZ. Predominately, she occupied an office administration manager role but would often fill in when people were away. In short, she said that she had multiple roles within the business but worked only on a casual basis. Concerning hours worked, the evidence provided was somewhat nebulous. This is not a criticism of Ms Rankin. It generally appeared that both parties were rather unprepared for the hearing notwithstanding the guidance that had been provided beforehand. From what was said it seemed that at times Ms Rankin would work one day a week, or week at a time, depending on the needs of the business.
[8] While Mr Chadkirk had not listed himself as a witness, I nevertheless considered that it was appropriate to hear from him given that he was the Managing Director of HGE. Mr Chadkirk gave evidence that he worked in the business approximately 60 hours a week. He received a salary on regular basis, but the amount fluctuated dependent on how the business was doing.
[9] Regarding two of the Harris NZ employees, Mr Chadkirk considered that they represented one employee for the purpose of the head count as the two employees occupied a job-share position.
Legislative Provisions
[10] For a person to be protected from unfair dismissal they must have, among other things, completed a period of employment with their employer which is at least the minimum employment period. 4 Section 383 of the Fair Work Act (2009) (Cth) (the Act) sets out the meaning of the minimum employment period as follows:
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) (ii) immediately before the dismissal; or
(b) if the employer is a small business employer--one year ending at that time.
[11] The meaning of the term ‘small business employer’ is found in s 23 of the Act:
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.
[12] An associated entity for the purposes of s 23(3) (by virtue of s 12 of the Act) has the meaning given by s 50AAA of the Corporations Act 2001 (Corporations Act). Section 50AAA of the Corporations Act provides that:
(1) One entity (the associate) is an associated entity of another entity (the principal) if subsection(2), (3), (4), (5), (6) or (7) is satisfied.
(2) This subsection is satisfied if the associate and the principal are related bodies corporate.
(3) This subsection is satisfied if the principal controls the associate.
(4) This subsection is satisfied if:
(a) the associate controls the principal; and
(b) the operations, resources or affairs of the principal are material to the associate.
(5) This subsection is satisfied if:
(a) the associate has a qualifying investment (see subsection (8)) in the principal; and
(b) the associate has significant influence over the principal; and
(c) the interest is material to the associate.
(6) This subsection is satisfied if:
(a) the principal has a qualifying investment (see subsection (8)) in the associate; and
(b) the principal has significant influence over the associate; and
(c) the interest is material to the principal.
(7) This subsection is satisfied if:
(a) an entity (the third entity) controls both the principal and the associate; and
(b) the operations, resources or affairs of the principal and the associate are both material to the third entity.
(8) For the purposes of this section, one entity (the first entity) has a qualifying investment in another entity (the second entity) if the first entity:
(a) has an asset that is an investment in the second entity; or
(b) has an asset that is the beneficial interest in an investment in the second entity and has control over that asset.
[13] For the purposes of s 50AAA(2) of the Corporations Act, an entity (the associate) and another entity (the principal) are related bodies corporate if they meet the following definition found in s 50 of that Act:
Related bodies corporate
Where a body corporate is:
(a) a holding company or another body corporate; or
(b) a subsidiary of another body corporate; or
(c) a subsidiary of a holding company of another body corporate;
the first mentioned body and the other body are related to each other.
[14] Section 50AA of the Corporations Act defines control as follows:
Control
(1) For the purposes of this Act, an entity controls a second entity if the first entity has the capacity to determine the outcome of decisions about the second entity's financial and operating policies.
(2) In determining whether the first entity has this capacity:
(a) the practical influence the first entity can exert (rather than the rights it can enforce) is the issue to be considered; and
(b) any practice or pattern of behaviour affecting the second entity's financial or operating policies is to be taken into account (even if it involves a breach of an agreement or a breach of trust).
(3) The first entity does not control the second entity merely because the first entity and a third entity jointly have the capacity to determine the outcome of decisions about the second entity's financial and operating policies.
(4) If the first entity:
(a) has the capacity to influence decisions about the second entity's financial and operating policies; and
(b) is under a legal obligation to exercise that capacity for the benefit of someone other than the first entity's members;
the first entity is taken not to control the second entity.
Consideration
Associated entities
[15] One of the issues in dispute surrounded the relationship between HGE and Harris NZ.
[16] Mr Basson asserted that HGE and Harris NZ were related entities in accordance with s 50AAA(2) of the Corporations Act on the basis that he was familiar with some of the employees in Harris NZ. Clearly, Mr Basson considered that the count of employees for the purpose of s 23 of the Act, should include those employees of HGE and those of Harris NZ.
[17] It should be observed that prior to the hearing both parties were provided with the relevant legislative provisions from both the Act and the Corporations Act. The provisions included those defining the terms ‘small business employer’, ‘associated entities’, and ‘related bodies corporate’.
[18] With respect to s 50AAA, Mr Basson made no submissions on whether any of the subsections had been satisfied. It was more the case that he simply believed, from having viewed the webpages of the both entities, and recalling the workers he had spoken to, that they were associated entities.
[19] HGE initially contended that at the time of Mr Basson’s redundancy there were no associated entities. However, during the course of the hearing, Mr Chadkirk considered s 50AAA of the Corporations Act. Having considered it, he concluded that HGE and Harris NZ were ‘associated entities’ as that term is understood in s 50AAA. While Mr Chadkirk referred to the two companies sharing resources it was challenging to identify the subsection of s 50AAA on which he relied to reach the conclusion he did. This was the case, albeit I questioned him on this point.
[20] In the circumstances before me, I consider that the party objecting to jurisdiction assumes the evidential onus of making out their case. In the absence of any cogent evidence on this point, I am reluctant to reach a conclusion on whether HGE and Harris NZ are associated entities. However, I am obliged to take into account the evidence and submissions of Mr Chadkirk, including his departure from his initial position and his concession that HGE and Harris NZ were associated entities at the relevant time. In such circumstances, I find that the two entities are associated.
A contractor, director and a job share arrangement
[21] When examining whether the employer has less than 15 employees, consideration is given to all employees employed at the particular time. Therefore, consideration must be given to whether a director of a company is considered an employee. For example, a managing director is usually a full-time employee of the company with day-to-day responsibilities. 5
[22] Mr Chadkirk presented a portrait of a hard-working man who dedicated a significant part of his life to running HGE. In this case, approximately 60 hours a week. On the evidence before me I am satisfied that Mr Chadkirk was an employee of HGE for the purpose of s 23 of the Act.
[23] Regarding the status of Ms Rankin, that is whether she was an employee at the particular time for the purpose of s 23, I find that she was. This is the case notwithstanding she was a director and worked on a casual basis. It appeared that for a sustained period of sixteen years, she had regularly worked for HGE and Harris NZ in a variety of positions, but predominately in an office administration role. That work appeared to have been regular ranging from one day a week, to a full week, dependent on the needs of the business.
[24] In Yaraka Holdings, Madgwick J noted with respect to the phrase ‘regular and systematic’, that a ‘regular … basis’ may be constituted by frequent though unpredictable engagements, and that a ‘systematic basis’ did not have to involve predictability concerning those engagements or an assurance of work. 6 For the purpose of considering the term ‘regular and systematic’ I have adopted the meaning set out in Yaraka Holdings. I am satisfied that Ms Rankin worked on both a regular and systematic basis.
[25] To determine whether Ms Knight was an employee or an independent contractor the Commission applies well-established common law principles. 7 There can be an appreciable difficulty in attempting to categorise a relationship as one of employee or independent contractor. Having heard what Ms Knight had to say, and observing the paucity of information on the point, I nevertheless find that Ms Knight was, as purported by Mr Chadkirk, an independent contractor.
[26] It is evident that s 23 of the Act makes no reference to a ‘job share’ arrangement. Its terms simply require that when calculating the number of employees employed at the particular time, all employees are to be counted. With respect to casual employees they are of course not counted unless employed on a regular and systematic basis.
[27] Mr Chardkirk submitted that two employees in Harris NZ worked in a job share arrangement and therefore for should be counted as one. I find that while they may share the one position, for the purpose of s 23 of the Act they constitute two employees.
Number of employees
[28] At the hearing there was some confusion as to the number of employees working at HGE. Mr Basson had provided a list compiled from his recollection, and HGE had submitted a list extracted from its cloud-based payroll system. Mr Basson raised that the list of employees compiled by HGE did not appear to have been extracted from the cloud-based payroll system at the time of his dismissal, but rather at a later point.
[29] To address the confusion, I directed HGE to provide its list of employees as at the time of Mr Basson’s dismissal. That list included fourteen employees, inclusive of Mr Chadkirk, Ms Rankin, and Mr Basson.
[30] As there appeared to be no disputation regarding the list of employees for Harris NZ, except for the position of Ms Knight, I was content to rely on the information provided in HGE’s submissions. It was therefore the case that there were three employees of Harris NZ.
Conclusion
[31] Considering the totality of the evidence, for the purpose of s 23 of the Act, I find that at the time Mr Basson was dismissed, there were 17 employees. If I am wrong about the employment status of Ms Rankin, it is the case nonetheless that there would be sixteen employees. I am satisfied then, that at the time Mr Basson’s employment ended, HGE did not employ fewer than 15 employees and so was not a small business.
[32] With this in mind, the minimum period of employment, according to s 383 of the Act, was six months. A period that Mr Basson has, on the evidence before me, served. Mr Basson has completed the minimum employment period which is a pre-requisite to making an unfair dismissal remedy application. Consequently, HGE’s objection that Mr Basson has not completed the required minimum employment period is hereby dismissed.
[33] The application will be programmed for arbitration and the parties advised of the date and time in due course.
DEPUTY PRESIDENT
Appearances:
M Basson for the Applicant
D Chadkirk for the Respondent
Hearing details:
By Phone, 25 July 2019
Printed by authority of the Commonwealth Government Printer
<PR710717>
1 Exhibit A2.
2 Exhibit R2.
3 Exhibit R2.
4 Fair Work Act 2009 (Cth) s 382.
5 Travis van Dreven v Safety Xpress Unit Trust T/A Safety Xpress [2017] FWC 4893 [14].
6 Yaraka Holdings Pty Ltd v Giljevic (2006) 149 IR 339, [89], [91] (Yaraka Holdings).
7 Jiang Shen Cai T/A French Accent v Michael Anthony Do Rozario [2011] FWAFB 8307 [25].
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