Miss Gemma Gittins v Amitik Pty Ltd ATFT Sea Otters Trust T/A Maylands Dental Centre

[2016] FWC 5007

[2016] FWC 5007

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Miss Gemma Gittins
v
Amitik Pty Ltd ATFT Sea Otters Trust T/A Maylands Dental Centre
(U2016/1713)

DEPUTY PRESIDENT CLANCY MELBOURNE, 25 JULY 2016

Application for relief from unfair dismissal – jurisdiction – minimum employment period not completed.

[1] Miss Gemma Gittins has alleged that the termination of her employment by Amitik Pty Ltd ATFT Sea Otters Trust T/A Maylands Dental Centre (Amitik) was unfair.

[2] Amitik says Miss Gittins was not an employee, or in the alternative, she was not protected from unfair dismissal because she not had served the minimum employment period pursuant to s.382(a) of the Fair Work Act 2009 (Cth) (the Act).

The Facts

[3] The Maylands Dental Centre business was sold by John James Gittins & Accordia Holdings Pty Ltd ATFT Gittins Service Trust (the old employer) to Amitik during February 2016, with settlement taking place on 18 March 2016.

[4] Amitik tendered a copy of an Agreement for Sale of Business (as a Going Concern) signed for and on behalf of both the old employer, defined as the ‘Seller’, and Amitik, defined as the ‘Buyer’, on 18 February 2016 (the Sale Agreement). 1 The Sale Agreement was in a form approved by the Australian Institute of Business Brokers (WA Division) and, in addition to being subject to the Australian Institute of Business Brokers (WA Division) 2015 General Conditions for the Sale of Business, included the following terms:

a) The purchase price was divided into three components, being goodwill, plant & equipment and stock (Clause 2);
b) The Settlement Date was Friday 18 March 2016 and the Possession Date & Time was the following day (Clauses 10 & 11);
c) Plant and equipment purchased by Amitik was itemised (Annexure A).

[5] The Australian Institute of Business Brokers (WA Division) 2015 General Conditions for the Sale of Business, included clause 12, which relevantly dealt with employees as follows:

“12. Employees

12.1 The Seller must terminate the employment of each Employee on and from the Possession Date.
12.2 The Seller must, within 5 Business Days from the Date of the Agreement, provide to the Buyer details of the terms and conditions of employment for Employees but the Seller is not required to identify any Employee.
12.3 The Buyer may to [sic] offer each Employee employment in the Business with the Buyer from the Possession Date on such terms and conditions as the Buyer considers reasonable.
12.4 The Seller is until the Possession Date solely responsible for the Employees and at Settlement must pay to the Employees the amounts (if any) due to each Employee, under any agreement, legislation or award for:

(a) accrued salary, wages or holiday pay but only if there is an entitlement to be paid in lieu;
(b) accrued entitlements to long Service Leave; and
(c) any other remuneration or entitlement arising out of the Employee’s employment or its termination,

and the Seller indemnifies, and must keep the Buyer indemnified against any claim against the Buyer in respect of the entitlements of Employees.
12.5…”

[6] Miss Gittins is the daughter of the previous owner of the Maylands Dental Centre. She said she had worked continuously for the old employer at the Maylands Dental Centre from approximately September 2012 onwards and on 5 March 2016, she was notified by the old employer that her employment would be terminated on 18 March 2016 and all her entitlements would be paid out. This was confirmed in a letter she received from the old employer 2 and her final payment for wages and holiday pay on 18 March 2016.3 Up until that time, Miss Gittins was working Tuesdays, Wednesdays and Thursdays and once per month, Saturdays. She says she was told that the new owner would be in touch regarding the possibility of re-employment.

[7] Miss Gittins says she met with the new owner, Doctor Scott Mennell, on 8 March 2016 and he asked if she would be happy to stay on. Miss Gittins says she said yes and that Dr Mennell stated he wanted continuity and as little change as possible. She said she was asked what days she worked and what her pay rate was. Miss Gittins agreed that Dr Mennell asked “Would you be willing to consider staying on” 4 and that although he did not say she would definitely have a job after the transfer of business, she understood from this conversation, in conjunction with the subsequent text message on 18 March 2016 that she had been offered employment.

[8] Miss Gittins also said that on 12 March 2016, Dr Mennell asked if she was willing to work every Saturday and she agreed to this too.

[9] A conversation took place between Miss Gittins and Dr Mennell’s wife and business partner, Dr Gemma Kitima, on 17 March 2016. Miss Gittins says she asked Dr Kitima about a possible change in opening hours of the Centre but Dr Kitima did not know the answer to her query and undertook to ask her husband to contact Miss Gittins in relation to this. Dr Kitima confirmed that she said she would speak to Dr Mennell and that she told Miss Gittins that she could not make any commitment to her without speaking to Dr Mennell.

[10] It is not disputed that on Friday 18 March 2016, Dr Mennell sent Miss Gittins the following text message:

“Hey Gemma sorry for late reply. As discussed we will require you Tuesday Wednesday Thursday next week 745 til 515 and Saturday 745 til 115. As [E]aster next week we will be closed Saturday.” 5

[11] Dr Mennell confirmed he met with Miss Gittins on 8 March 2016 but said there was no mention of Miss Gittins being kept on after the sale of the business. As to the conversation on 12 March 2016, he said that he told Miss Gittins that he and Dr Kitima were reviewing all staff to ensure they had the right staff for the right roles and that because he believed there was a surplus in staff, he asked her to submit in writing the roles she was performing for Maylands Dental Centre.

[12] Dr Mennell also gave evidence that on 12 March 2016, he asked Miss Gittins whether she would be open to working as a receptionist on different hours on a casual basis and that he required help in the transition of the business. He says he told her that everyone was on trial and he could make no commitment to anyone having a role after the business sale was completed.

[13] In relation to the text message he sent Miss Gittins on 18 March 2016, Dr Mennell said that it was not a clear offer of employment but rather instructions for one week’s work following his taking over of the business and no commitment beyond that. He conceded that there was “some sort of potential offer” and the text message “potentially being misconvoluted of an official offer”, 6 however his position was “it was for a one week help with the transition, there was no firm commitment to an ongoing employment, there was no offer of remuneration.”7

[14] Dr Mennell said that on 19 March 2016, Amitik decided to hire another receptionist and this, together with his discovery that Miss Gittins had sent the Maylands Dental Centre patient list to the previous owner led to the decision by Amitik not to engage Miss Gittins with the transition. Dr Mennell said he attempted to advise Miss Gittins of this by telephone during the three days prior to 22 March 2016 8 but Miss Gittins did not answer or return his phone calls from his mobile and work phone. Dr Mennell said that there was no message bank service on Miss Gittins’ phone and that it was switched off and that he also tried to contact her through her father on 19 March 2016.9 Miss Gittins confirmed a missed call from Dr Mennell’s mobile phone10 but said her phone did have a message bank service. In any event, there was no discussion between Dr Mennell and Miss Gittins before 22 March 2016.

[15] Miss Gittins said she attended for work at 7.30am on Tuesday 22 March 2016 and on attempting to log into the reception area computer, discovered she did not have access. She did not perform any work 11 and was asked into the office by Dr Mennell when he arrived at approximately 7.45am. She was dismissed during this subsequent meeting, effective immediately. Miss Gittins left the workplace shortly after and was not paid in respect of 22 March 2016.

[16] Amitik relied on Clause 12 of the Australian Institute of Business Brokers (WA Division) 2015 General Conditions for the Sale of Business in the Sale Agreement, which provided that the old employer was to terminate the employment of each Employee on and from the Possession Date. Amitik further submitted “all communication with previous staff before take over was carried out by the old owner and there wasn’t a requirement for me to contact them via writing as all required information had been given in writing by [the] previous owner.” 12

[17] Dr Mennell says that he was notified by the old employer that all previous staff were given their required notice and paid their monetary entitlements. 13

Applicable Law

[18] Section 22 of the Act relevantly provides:

“22 Meanings of service and continuous service

…

When service with one employer counts as service with another employer

(5) If there is a transfer of employment (see subsection (7)) in relation to a national system employee:

(a) any period of service of the employee with the first employer counts as service of the employee with the second employer; and

(b) the period between the termination of the employment with the first employer and the start of the employment with the second employer does not break the employee’s continuous service with the second employer(taking account of the effect of paragraph (a)), but does not count towards the length of the employee’s continuous service with the second employer.

Note: This subsection does not apply to a transfer of employment between non-associated entities, for the purpose of Division 6 of Part 2-2 (which deals with annual leave) or Subdivision B of Division 11 of Part 2-2 (which deals with redundancy pay), if the second employer decides not to recognise the employee’s service with the first employer for the purpose of that Division or Subdivision (see subsections 91(1) and 122(1)).

(6) If the national system employee has already had the benefit of an entitlement the amount of which was calculated by reference to a period of service with the first employer, subsection (5) does not result in that period of service with the first employer being counted again when calculating the employee’s entitlements of that kind as an employee of the second employer.

Note: For example:

(a) the accrued paid annual leave to which the employee is entitled as an employee of the second employer does not include any period of paid annual leave that the employee has already taken as an employee of the first employer; and

(b) if an employee receives notice of termination or payment in lieu of notice in relation to a period of service with the first employer, that period of service is not counted again in calculating the amount of notice of termination, or payment in lieu, to which the employee is entitled as an employee of the second employer.

Meaning of transfer of employment etc.

(7) There is a transfer of employment of a national system employee from one national system employer (the first employer) to another national system employer (the second employer) if:

(a) the following conditions are satisfied:

(i) the employee becomes employed by the second employer not more than 3 months after the termination of the employee’s employment with the first employer;

(ii) the first employer and the second employer are associated entities when the employee becomes employed by the second employer; or

(b) the following conditions are satisfied:

(i) the employee is a transferring employee in relation to a transfer of business from the first employer to the second employer;

(ii) the first employer and the second employer are not associated entities when the employee becomes employed by the second employer.

Note: Paragraph (a) applies whether or not there is a transfer of business from the first employer to the second employer.

(8) A transfer of employment:

(a) is a transfer of employment between associated entities if paragraph (7)(a) applies; and

(b) is a transfer of employment between non-associated entities if paragraph (7)(b) applies.”

[19] Section 311 of the Act relevantly provides:

“311 When does a transfer of business occur

Meanings of transfer of business, old employer, new employer and transferring work

(1) There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:

(a) the employment of an employee of the old employer has terminated;

(b) within 3 months after the termination, the employee becomes employed by the new employer;

(c) the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;

(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).

Meaning of transferring employee

(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.

Transfer of assets from old employer to new employer

(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:

(a) the old employer or an associated entity of the old employer; and

(b) the new employer or an associated entity of the new employer;

the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):

(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and

(d) that relate to, or are used in connection with, the transferring work.”

[20] Section 383 of the Act provides:

“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.”

[21] Section 384 of the Act provides:

“384 Period of employment

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

(2) However:

…

(b) if:

(i) the employee is a transferring employee in relation to a transfer of business from an old employer to a new employer; and

(ii) the old employer and the new employer are not associated entities when the employee becomes employed by the new employer; and

(iii) the new employer informed the employee in writing before the new employment started that a period of service with the old employer would not be recognised;

the period of service with the old employer does not count towards the employee’s period of employment with the new employer.”

Consideration

[22] In order to be protected from unfair dismissal, Miss Gittins must have served the minimum employment period (s.382(a) of the Act). In this case, it is not disputed that the minimum employment period is 12 months. It is also not disputed that Miss Gittins had approximately two and a half years continuous service with the old employer.

[23] The question to be determined is whether any period of Miss Gittins’ employment with the old employer counts as service with Amitik. It will count, having regard to the circumstances of this case, provided I am satisfied that there was a transfer of her employment within the meaning of s.22(8)(b) of the Act. This requires Miss Gittins to have been a ‘transferring employee’ in relation to a transfer of business from the old employer to Amitik. 14

[24] Section 311(2) of the Act provides that a ‘transferring employee’ in relation to a transfer of business is an employee to whom the following requirements are satisfied:

• The employment of an employee of the old employer has terminated (s.311(1)(a) of the Act);



• Within 3 months after the termination, the employee becomes employed by the new employer (s.311(1)(b) of the Act);



• The work the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer (s.311(1)(c) of the Act).

[25] If Miss Gittins was a transferring employee and there was a transfer of assets from the old employer to Amitik by virtue of the interaction between s.311(1)(d) and s.311(3) of the Act, there will have been a transfer of business pursuant to s.311(1) of the Act.

[26] Miss Gittins submitted that there was a transfer of business. She says her employment with the old employer was terminated on 18 March 2016 (s.311(1)(a) of the Act) and she was offered employment with Amitik in the conversation on 8 March 2016 and the text message on 18 March 2016, which she accepted when she arrived to work on 22 March 2016 (s.311(1)(b) of the Act).

[27] As to the requirements of s.311(1)(c) of the Act, Miss Gittins submitted she was not given the chance to perform work but had she been, it would have been substantially the same as the work she performed for the old employer. 15

[28] Miss Gittins also submitted that there was a connection between the old employer and Amitik by way of a transfer of assets, in that Dr Mennell had the beneficial use of some or all of the assets that the old employer had the beneficial use of, and that related to or were connected with the transferring work (s.311(1)(d) of the Act). Miss Gittins relied on the terms of the Sale Agreement which, she submitted, made it clear that there was a transfer of all assets, including items such as the lease, equipment, patient details and stock and that this was the case whether or not the equipment was owned or leased by the old employer. Miss Gittins submitted that Amitik took over the beneficial use of these assets and relied on the decision of Hill v Sahir T/A Café Moderno at Fountain Gate 16 although, for reasons outlined below, the facts in this case are distinguishable.

[29] Amitik submitted that there was no transfer of business because there were no assets transferred from the old employer to it. It sought to rely on a Master Asset Finance Agreement it made with BOQ Specialist on 17 March 2016 and submitted that because this established the equipment was being leased off the Bank of Queensland, there was no business transfer but rather, a complete sale of the business to a new entity. Amitik submitted that the equipment was not transferred directly from the old employer to it but rather it was transferred via the Bank of Queensland because the equipment had not been owned outright by the old employer.

[30] I am satisfied there was a transfer of assets from the old employer to Amitik that would establish a connection between the old employer and Amitik for the purposes of s.311(1)(d) of the Act. The Sale Agreement provided that the purchase price was divided into three components, being goodwill, plant & equipment and stock. Amitik financed the value of the plant & equipment and stock components of the total purchase price through the Master Asset Finance Agreement it made with BOQ Specialist. I do not consider that the fact that this transfer was funded by the Master Asset Finance Agreement precludes there having been a transfer of assets for the purposes of s.311(3) of the Act because Amitik now either owns or has the beneficial use of some or all of the assets that the old employer owned or had the beneficial use of.

[31] Notwithstanding the submissions of Amitik, I am also satisfied the evidence establishes that the employment of Miss Gittins with the old employer terminated and within three months of the termination she became employed by Amitik, even if the terms of that employment were disputed. I am also satisfied Miss Gittins was not advised in writing by Amitik that her service with the old employer would not be recognised.

[32] However, I am not persuaded that Miss Gittins was a transferring employee because the condition in s.311(1)(c) of the Act was not satisfied. Section 311(1)(c) requires the work an employee performs for a new employer to be the same, or substantially the same, as the work he or she performed for the old employer, but the evidence did not establish that Miss Gittins performed any work for Amitik. 17 The wording of the subsection is ‘performs’ not ‘will perform’ or ‘to be performed by the employee’ and a plain reading of it requires the employee to have started performing work before an employee becomes a transferring employee and a transfer of business occurs.

[33] In this regard, I note that in Farrugia v Building Technology Integrators Pty Ltd, 18 it was said of s.311(1)(c) of the Act:

“…it is clear from the relevant provision and the Explanatory Memorandum that s.311(1)(c) relates to the similarity in the actual work performed by the transferring employee.” 19

[34] As I am not persuaded Miss Gittins was a transferring employee, the conditions of s.22(7) and therefore, s.22(5) of the Act are not satisfied and her service with the old employer does not count. Miss Gittins therefore has not completed the minimum period of employment with Amitik in order to be a person protected from unfair dismissal pursuant to s.382 of the Act.

[35] The unfair dismissal application of Miss Gittins must therefore be dismissed and an order to that effect will be issued with this decision.

DEPUTY PRESIDENT

Appearances:

G Gittins on her own behalf.

Dr S Mennell on behalf of the Respondent.

Hearing details:

2016.

Melbourne and Perth (video hearing):

May 16.

Final written submissions:

Applicant: 25 May 2016

Respondent: 18 May 2016

 1   Exhibit R1

 2   Transcript PN 201.

 3   Exhibit A2.

 4   Transcript PN 183.

 5   Exhibit A4.

 6   Transcript PN 39.

 7   Transcript PN 36.

 8   Exhibit R9.

 9   Exhibit R6.

 10   Exhibit A3.

 11   Transcript PN 48, PN 172 and PN 179.

 12   Respondent’s Submissions dated 26 April 2016.

 13   Exhibits R2, R3 and R7.

 14 Section 22(7)(b) of the Fair Work Act 2009 (Cth).

 15   Transcript PN 172.

 16   [2013] FWC 668.

 17   Transcript PN 48, PN 172 and PN 179.

 18   [2011] FWA 1285.

 19 Ibid at [22].

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