Michelle Horlor v The Symon Trust T/A Kensington Park Medical Practice

[2016] FWC 1522

[2016] FWC 1522

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Michelle Horlor
v
The Symon Trust T/A Kensington Park Medical Practice
(U2015/16207)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 21 MARCH 2016

Application for relief from unfair dismissal - small business - associated entities - genuine redundancy - consultation requirement - jurisdictional objection dismissed.

[1] On 24 November 2015 Ms Horlor lodged an application pursuant to s.394 of the Fair Work Act 2009 (the FW Act) in which she contended that the termination of her employment with The Symon Trust T/A Kensington Park Medical Practice (the Kensington Park Medical Practice) was unfair. The Kensington Park Medical Practice responded to the application by asserting that Ms Horlor was not a person protected from unfair dismissal because she had not completed the requisite minimum employment period. Kensington Park Medical Practice asserted the Small Business Fair Dismissal Code applied to Ms Horlor and that the termination of her employment was consistent with that code such that it could not be unfair. Finally, Kensington Park Medical Practice asserted that the termination of Ms Horlor’s employment was a case of genuine redundancy such that it could not be unfair. These jurisdictional issues were referred to me for determination.

[2] The matter was the subject of a directions conference on 20 January 2016. At this conference I specified the requirement for material to be provided to me and to be exchanged to expedite consideration of these jurisdictional issues. The material provided by Kensington Park Medical Practice left a significant element of doubt, particularly in relation to the corporate structure of the respondent. As a result, I required the provision of further material to be available at the hearing of these jurisdictional objections on 8 March 2016.

[3] At this hearing Mr Hakkinen represented Ms Horlor, as a paid agent pursuant to a grant of permission made under s.596(2)(a) of the FW Act. I note that this representation request was not opposed by Kensington Park Medical Practice. It is also appropriate that I take the somewhat unusual step of noting that Mr Hakkinen did not assist in the efficient conduct of the matter and, bluntly, did not contribute a great deal to the conduct of the matter.

[4] Dr Symon’s represented Kensington Park Medical Practice.

[5] The background to the jurisdictional matter can be simply set out. Ms Horlor commenced employment on 17 February 2015. She was dismissed on 6 November 2015. If Kensington Park Medical Practice was a small business for the purposes of the FW Act, she would not have completed the requisite minimum employment period required by s.382 of the FW Act and would consequently not be a person protected from unfair dismissal. Consideration of the Small Business Fair Dismissal Code is unnecessary in these circumstances because, if Kensington Park Medical Practice is a small business employer the minimum employment period requirement applies.

[6] The genuine redundancy issue arises from s.385 of the FW Act which states:

“385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.”

[7] Consequently, Kensington Park Medical Practice argued that, even if Ms Horlor is a person protected from unfair dismissal, the termination of her employment could not be unfair if it met the definition of a genuine redundancy in s.389 of the FW Act.

The evidence

[8] Whilst I have taken all of the material before me into account, I have briefly summarised the witness evidence in the following terms.

[9] Dr Symon is a trustee for the Symon Trust which owns the business name Kensington Park Medical Practice. Dr Symon is a director and/or shareholder of a number of companies. His evidence went to the corporate structure of these businesses and to the circumstances under which Ms Horlor was engaged as a Registered Practice Nurse. Dr Symon’s evidence went to how he became aware, in October 2015, that the Kensington Park Medical Practice was operating at a loss and the steps he then took to address this situation. He explained that he met with employees in October 2015 but was subsequently made aware that Ms Horlor was not generating the income which had been anticipated and, on 6 November 2015, he advised her that the business could no longer afford to retain her as an employee. Dr Symon confirmed that he considered, but discounted, redeployment opportunities for Ms Horlor and that her position had not been replaced.

[10] Ms Inman is the book-keeper for Kensington Park Medical Practice. Her evidence went to explain various employee number reports, the Kensington Park Medical Practice’s financial position and the extent to which the function undertaken by Ms Horlor was operating at a loss.

[11] Ms Horlor’s evidence went to her understanding that the various companies in which Dr Symon had a stakeholding, operated as a single entity and how the work she undertook was integrated with these businesses. She asserted that she had not been told of the financial difficulties impacting on the Kensington Park Medical Practice and had been reassured by Dr Symon about the security of her position not long before she was dismissed.

[12] It is also appropriate that I note that I have placed substantial weight on a chart 1 provided by Dr Symon, which identified the various corporate entities and ownership arrangements.

Findings

[13] Section 382 establishes when a person is protected from unfair dismissal. This section states:

“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.”

[14] Section 383 states:

“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.”

[15] Section 23 defines a small business in the following terms:

“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.”

[16] Section 12 defines an associated entity on the basis of the definition in s.50AAA of the Corporations Act 2001 (the Corporations Act). This section states:

“50AAA Associated entities

(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.”

[17] I have considered the various different employing entities in which Dr Symon is involved in the context of this definition.

[18] The body corporate which controls Kensington Park Medical Practice is Wijers Nominees Pty Ltd which is jointly and equally owned by Dr Symon and his wife Ms Symon. I have concluded that Wijers Nominees Pty Ltd, through Kensington Park Medical Practice employed five persons at the time of the termination of Ms Horlor’s employment. This is established by the Payroll Activity Summary provided by Ms Inman. 2 Whilst Ms Inman was not inclined to count Ms Symon as an employee, I have done so on the basis that she is paid a wage, has tax deducted, and Ms Inman’s advice is that she undertakes various duties around the Practice.

[19] Dr Symon and his wife also jointly and equally own Australian Family Care Pty Ltd which trades as Salisbury Family Care. I note that at least one of the employment conditions letters given to Ms Horlor was on an Australian Family Care Pty Ltd letterhead. 3 In terms of the Corporations Act, I have regarded Australian Family Care Pty Ltd as an entity associated with Wijers Nominees Pty Ltd in that they share the same directors and shareholders. Australian Family Care Pty Ltd employed seven persons at the time of the termination of Ms Horlor’s employment. In this respect I have relied on the Payroll Activity Summary4 provided by Ms Inman but, contrary to Ms Inman’s position, I have included Ms Hughes as an employee on the basis that the information before me establishes that she was paid a wage and had tax deducted. Whilst I appreciate that Ms Hughes may have been working under a temporary Registrar placement arrangement, as part of a structured training arrangement, there is nothing to indicate that she should not be counted as an employee.

[20] I am satisfied that a partnership between Dr and Ms Symon which is recorded on the chart 5 was not, at the time of the termination of Ms Horlor’s employment, an employing entity.

[21] Welsy Consulting Pty Ltd trades as Para Hills Clinic. Dr Symon’s evidence relative to ownership of this entity was not altogether clear. His chart showing the group structure shows him as director of that company and having a 50% shareholding. 6 It does not identify the other ownership arrangements. However, Dr Symon’s evidence in this respect was clear in that he acknowledged that he was ultimately able to exercise control over that company.7 Welsy Consulting Pty Ltd employed four persons at the time of the termination of Ms Horlor’s employment.8

[22] I think it very possible that Manor Family Care Pty Ltd which is jointly and equally owned by The B G Symon Superannuation Fund and another doctor could also be regarded as an associated entity pursuant to the Corporations Act, but because the total employee count for employees of clearly associated entities at the time of the termination of Ms Horlor’s employment already exceeds 15, it is not necessary that I reach a conclusion in this regard.

[23] For the sake of completeness, I do not regard Reynella Family Care, an entity in which Dr Symon has only a 45% shareholding, as an associated entity.

[24] Because I have concluded that Kensington Park Medical Practice, together with its associated entities had more than 15 employees at the time of the termination of Ms Horlor’s employment on 6 November 2015, that business is not a small business and Ms Horlor had completed the requisite six month minimum employment period. For the same reasons the Small Business Fair Dismissal Code does not have application.

[25] The final jurisdictional objection to Ms Horlor’s application is made on the basis that the termination of her employment was a case of genuine redundancy. Section 385 states:

“385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.”

[26] A genuine redundancy is defined in s.389 in the following terms:

“389 Meaning of genuine redundancy

(1) A person’s dismissal was a case of genuine redundancy if:

(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and

(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

(a) the employer’s enterprise; or

(b) the enterprise of an associated entity of the employer.”

[27] The evidence of Dr Symon and, to a lesser extent, Ms Inman, establishes that Kensington Park Medical Practice made a clear decision in November 2015 that its financial situation was such that it no longer required that Ms Horlor’s job be performed by anyone. The uncontested evidence was that Ms Horlor has not been replaced. Accordingly, I am satisfied that the requirement in s.389(1)(a) has been met in this instance.

[28] In terms of s.389(1)(b), there is no dispute that Ms Horlor’s employment was governed by the Nurses Award 2010. Whilst that Award substantially adopts the redundancy provisions set out in the National Employment Standards in the FW Act, it has specific provisions dealing with consultation. Clause 8.1 defines major changes which are likely to have significant effects on employees. This definition includes the restructuring of jobs and job tenure and hence covers the termination of Ms Horlor’s employment. Clause 8.1(b) states:

“8.1(b) Employer to discuss change

(i) The employer must discuss with the employees affected and their representatives, if any, the introduction of the changes referred to in clause 8.1(a), the effects the changes are likely to have on employees and measures to avert or mitigate the adverse effects of such changes on employees and must give prompt consideration to matters raised by the employees and/or their representatives in relation to the changes.

(ii) The discussions must commence as early as practicable after a definite decision has been made by the employer to make the changes referred to in clause 8.1(a).

(iii) For the purposes of such discussion, the employer must provide in writing to the employees concerned and their representatives, if any, all relevant information about the changes including the nature of the changes proposed, the expected effects of the changes on employees and any other matters likely to affect employees provided that no employer is required to disclose confidential information the disclosure of which would be contrary to the employer’s interests.”

[29] Ms Horlor’s evidence was that there was no consultation with her before she was advised of the termination of her employment. This is inconsistent with the advice in her Form F2 9 which states:

“Two weeks prior to the Applicant’s dismissal, the Applicant was aware that some of the Respondent’s practices were having financial troubles and asked the Respondent if she should start looking for another job. The Respondent assured the Applicant that her job was safe and that looking for another job was not an option, and that the Applicant just needed to get more patients in for aesthetic services and other higher paying consultations.”

[30] Dr Symon’s evidence was that the financial state of the Kensington Park Medical Practice was discussed with employees, including Ms Horlor in a regular monthly meeting in October 2015 and further cost savings were then discussed on an on-going basis. I have accepted this position.

[31] However, I am not satisfied that the requirement in clause 8.1(b)(iii) namely, that
Ms Horlor had to be provided with written advice about the changes, including the nature of the change proposed and its likely effect was met. Dr Symon’s evidence that this was not a realistic expectation on a small business may be the case, but in terms of s.389, I am required to apply the FW Act. Consequently, the requirement for compliance with the relevant Award consultation requirement has not been met.

[32] In terms of the reasonableness of redeployment in these circumstances, I have accepted the evidence of Dr Symon, that he considered but then discounted that possibility. I do not consider redeployment to be reasonable in these circumstances.

[33] Consequently, in terms of s.389, I am not satisfied that the mandatory requirements for a genuine redundancy have all been met in this instance. Accordingly, the jurisdictional objection made on this basis must be dismissed.

[34] It follows that Ms Horlor is able to further pursue her application. An Order (PR577861) dismissing the jurisdictional objections made by Kensington Park Medical Practice will be issued and the application will be referred for conciliation.

[35] One final observation is appropriate. In the course of the hearing in this matter I referred the parties to the Full Bench decision in UES (Int’l) Pty Ltd v Leevan Harvey 10 and suggested that this decision could provide some practical guidance on the options available to the parties. I have now provided a copy of that Full Bench decision to the parties and recommend that close consideration be given to the approach endorsed by the majority. The circumstances of this matter mean that there is a real risk that the pursuit of unrealistic expectations could mean that both parties incur unnecessary but substantial costs.

Appearances:

T Hakkinen counsel for the Applicant.

B Symon for the respondent.

Hearing details:

2016.

Adelaide:

March 8.

 1   Exhibit R1.

 2   Exhibit R6.

 3   Exhibit R2.

 4   Exhibit R7.

 5   Exhibit R1.

 6   Exhibit R1.

 7   Sound Recording, 8 March 2016, 10.39 am.

 8   Exhibit R8.

 9   Form F2, question 3.2[4].

 10   [2012] FWAFB 5241.

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