Miss Tanya Wright v Tommy Guns Carindale Pty Ltd

[2019] FWC 8302

[2019] FWC 8302

FAIR WORK COMMISSION

DECISION

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

Miss Tanya Wright
v
Tommy Guns Carindale Pty Ltd
(U2019/8298)

COMMISSIONER HUNT BRISBANE, 23 DECEMBER 2019

Application for an unfair dismissal remedy – whether small business employer – whether related business is an associated entity – whether applicant met minimum employment period – insufficient evidence to determine whether casual employees should be counted against total number of employees – respondent ordered to produce time and wage records.

[1] On 26 July 2019, Ms Tanya Wright made an application pursuant to s.394 of the Fair Work Act 2009 (the Act) alleging that her dismissal from Tommy Guns Carindale Pty Ltd (Tommy Guns Carindale) was harsh, unjust or unreasonable. Ms Wright was employed by the respondent as a casual receptionist on or about 30 November 2018 and was dismissed on or about 25 July 2019. It is not contested that Ms Wright’s rate of earnings in her employment was less than the high income threshold as at the date of her dismissal, being $148,700 per annum.

[2] Ms Wright alleges that she was dismissed after providing a book to a fellow employee, which she was later advised is against the religious beliefs of Mr Luke Wightman, the owner of the respondent.

[3] The respondent objects to the application on the following jurisdictional grounds:

(a) That the respondent was a small business employer at the date of the applicant’s dismissal and the applicant did not complete the applicable minimum employment period of one year to be protected from unfair dismissal pursuant to ss.382, 383 of the Act; and

(b) That the respondent complied with the Small Business Fair Dismissal Code (the Code) in dismissing the applicant from her employment.

Legislation

[4] Produced below are relevant sections of the Act and the Corporations Act 2001 (the Corporations Act). Each section’s relevance will become clearer once all of the parties’ evidence is reviewed below.

[5] Section 396 of Act sets out several matters that must be considered before the merits of an application can be considered, and states:

“396 Initial matters to be considered before merits

The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:

(a) whether the application was made within the period required in subsection 394(2);

(b) whether the person was protected from unfair dismissal;

(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;

(d) whether the dismissal was a case of genuine redundancy.”

[6] Section 382 of the Act provides for when a person is protected from unfair dismissal, and 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.”

[7] Section 383 of the Act defines the meaning of ‘minimum employment period’ and 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.”

[8] Section 384 of the Act sets out how an employee’s period of employment is counted, and states:

“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:

(a) a period of service as a casual employee does not count towards the employee's period of employment unless:

(i) the employment as a casual employee was on a regular and systematic basis; and

(ii) during the period of service as a casual employee, the employee had a reasonable expectation of continuing employment by the employer on a regular and systematic basis; and

(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.”

[9] Section 23 of the Act defines the meaning of “small business employer”, and states:

“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.”

[10] Section 50AAA of the Corporations Act sets out the meaning of “associated entities”, and 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.”

[11] Except in chapter 2E and 8A of the Corporations Act, a reference to an “entity” in the Corporations Act is a reference to “…a natural person, a body corporate (other than an exempt public authority), a partnership or a trust” 1 and for a trust, includes “…a reference to the trustee of the trust.”2

[12] Section 50AA of the Corporations Act defines the meaning of “control”, and states:

“50AA 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.”

[13] Pursuant to s.396 of the Act, the respondent’s jurisdictional objection that Ms Wright had not completed the applicable minimum period of employment and was therefore not a person protected from unfair dismissal must be determined before the merits of Ms Wright’s application can be considered.

Summary of evidence regarding respondent’s associated entities and employees

[14] Ms Wright stated in her Form F2 application that her hours and days of work rarely changed during her employment, which are set out as follows:

(c) 9.5 hours on Wednesdays;

(d) 6.5 hours on Thursday nights;

(e) 9.5 hours on Friday;

(f) 9.5 hours on Saturdays;

(g) Totalling 35 hours per week.

[15] Ms Wright stated that she also occasionally worked Sundays and filled-in for other employees’ shifts on Mondays or Tuesdays.

[16] Ms Wright provided payslips along with her Form F2 application for each weekly pay period between 3 December 2018 and 28 July 2019. It is not necessary to replicate Ms Wright’s hours of work for each week of her employment, however, Ms Wright’s payslips show that Ms Wright performed work during 31 out of 34 weekly pay periods during her employment, and she worked for an average of 25.4 hours during each weekly pay periods that she did work.

[17] While the respondent notes that Ms Wright was employed on a casual basis, the respondent has not raised a jurisdictional objection that her service should not count towards her period of employment because she was not employed on a regular and systematic basis and she did not have a reasonable expectation of continuing employment on a regular and systematic basis, pursuant to s.384 of the Act.

[18] Ms Wright submits that the respondent is not a small business employer on the basis that Mr Wightman, the Director of the respondent, operates four other ‘Tommy Guns’ barber shops within the Southeast Queensland area, and the respondent is not a small business when accounting for all employees of it and the entities which the applicant asserts are associated entities.

[19] On 31 October 2019, Ms Wright provided to the Commission company extracts she had retrieved from the Australian Securities and Investments Commission’s (ASIC) website on 30 October 2019 relating to Tommy Guns Carindale and another ‘Tommy Guns’ store, ‘Tommy Guns Chermside Pty Ltd’ (Tommy Guns Chermside). The extracts provided by the applicant showed that Mr Wightman was the sole director and shareholder of both of those entities.

[20] Upon allocation of this matter to me, I directed the respondent to provide evidence of its associated entities and the number of employees at each of its associated entities as at 25 July 2019.

[21] On 5 November 2019, Mr Wightman wrote to my chambers on behalf of the respondent and confirmed that he is a director of the respondent and of Tommy Guns Chermside. Mr Wightman stated that he consults at three other ‘Tommy Guns’ stores within the Southeast Queensland area but he does not have any financial interest in those three stores or the entities that operate them.

[22] After receiving Mr Wightman’s correspondence I indicated that while the respondent had provided some information as directed, it had not provided a witness statement or evidence setting out all of the respondent’s associated entities and the number of employees employed by each of those entities as at 25 July 2019.

[23] On 7 November 2019, Mr Wightman provided extracts of two ‘payroll activity summaries’ for the period of 22 July 2019 to 28 July 2019, one for each of the Tommy Guns Chermside and Tommy Guns Carindale stores, showing all employees for each of those stores over that period, including the date of the applicant’s dismissal. The evidence provided by Mr Wightman showed that each of Tommy Guns Chermside and Tommy Guns Carindale employed 13 people during that period, a total of 26 employees when calculated together. Of those 26 employees, 10 were employed on either a full-time or part-time basis and the remaining 16 were employed as casual employees.

[24] Mr Wightman gave a short, identical statement regarding each of the payroll summary documents, and stated, “In total, we have 5 full time/part time staff members. The remaining casual staff have irregular and consistantly changes hours of work. [sic]”.

[25] Further, the respondent provided a statement given by Ms Susan Dring, bookkeeper for two entities known as “Wightman Productions Pty Ltd” and “The Trustee for Paul Alexander Trust”. Ms Dring stated that Mr Wightman is not a director of either of those entities.

[26] Following receipt of the respondent’s evidence, I wrote to the parties and referred them to the meaning of ‘associated entities’ and ‘control’ under ss.50AAA, 50AA of the Corporations Act.

[27] I advised the parties that my preliminary view was that Mr Wightman, being a director of both Tommy Guns Carindale and Tommy Guns Chermside, is a third entity which controls both Tommy Guns Carindale and Tommy Guns Chermside, being the principal and the associate respectively, and the operations, resources or affairs of those entities are material to Mr Wightman, and therefore Tommy Guns Carindale and Tommy Guns Chermside are associated entities pursuant to s.50AAA(7) of the Corporations Act.

[28] I advised the parties that together, Tommy Guns Carindale and Tommy Guns Chermside employed more than 15 employees at the time of the applicant’s dismissal, and on that basis the respondent may not have been a small business employer at the time of the applicant’s dismissal. I asked whether the respondent maintained that it was a small business employer at the time of the applicant’s dismissal in light of my preliminary views.

[29] Mr Wightman wrote to my chambers following my preliminary views and stated that the respondent maintained that it was a small business employer at the time of the applicant’s dismissal. Mr Wightman submitted that the majority of the 26 total employees at the time of the applicant’s dismissal had been casual employees with less than six months’ service, and many of them had been trainees or students or were transient, international workers, and those employees should be not counted towards the total number of employees between Tommy Guns Carindale and Tommy Guns Chermside.

[30] Ms Wright responded to Mr Wightman’s correspondence and submitted that most of the casual employees at the Tommy Guns Carindale store were employed on a regular and systemic basis and worked at that store for more than six months. Ms Wright identified nine casual employees from the Tommy Guns Carindale that, to her knowledge, had worked at the store on a regular and systemic basis and had been employed for more than six months. Ms Wright’s submissions included some limited information about the shifts and days that some of those nine casual employees regularly worked from week to week.

[31] Ms Wright named four additional employees that worked in one or both of the Tommy Guns Carindale and Tommy Guns Chermside stores, which had not been counted against the employees of either store in the respondent’s evidence. Ms Wright stated that newer casual employees that had been employed for less than six months also worked on a regular and systemic basis.

[32] I directed the respondent to produce records setting out the times and dates worked and wages earned by all employees at both the Tommy Guns Carindale and Tommy Guns Chermside stores for the period of 1 April 2019 to 15 August 2019, including evidence of weekly rosters and a consolidated record of hours worked by each employee for each week during that period. A short extension of time was provided for the respondent to provide the requested records due to personal circumstances arising for Mr Wightman.

[33] On 29 November 2019, Mr Wightman wrote to my chambers and stated, “I have decided not to proceed with providing the information for wether [sic] or not I’m deemed a small business. It was going to be costly and time consuming. That money would be better spent elsewhere at this time of year…”.

[34] Following Mr Wightman’s correspondence, I wrote to the parties and noted that the respondent did not wish to provide the records I had directed it to provide. I advised the parties that I would consider the material before me and issue a decision regarding the respondent’s jurisdictional objections in due course.

Consideration

[35] Both of the respondent’s jurisdictional objections rest upon it being a small business employer at the time of the applicant’s dismissal on 25 July 2019. As stated above, I must determine whether Ms Wright completed the applicable minimum employment period and was a person protected from unfair dismissal before considering the merits of her application.

[36] The Respondent does not contest that Ms Wright was employed on a regular and systematic basis during her employment. Having considered the payslips provided to the Commission by Ms Wright, I am satisfied that she was employed on a regular and systematic basis and during the period of her service she had a reasonable expectation of continuing employment on such a basis, pursuant to s.384 of the Act. I am satisfied that Ms Wright’s period of employment was, at the least, from 3 December 2019 to 25 July 2019, which is a period greater than six months, even taking into account three weeks where Ms Wright did not perform work.

[37] Pursuant to ss.382, 383 of the Act, the minimum period of employment for an employee of a small business employer to be protected from unfair dismissal is one year, and the minimum employment period for an employee of an employer that is not a small business employer is six months. Therefore, if the respondent was a small business employer at the time of Ms Wright’s dismissal, she will not have been protected from unfair dismissal and I must dismiss her application. However, if the respondent was not a small business employer at the of Ms Wright’s dismissal, she will be protected from unfair dismissal and it will be necessary to convene a hearing to consider the merits of her substantive application.

Was the respondent a small business employer – are Tommy Guns Carindale and Tommy Guns Chermside associated entities?

[38] I must consider whether Mr Wightman, as a natural person and as the ‘third entity’ contemplated in s.50AAA(7) of the Corporations Act, ‘controls’ both of the Tommy Guns Carindale and Tommy Guns Chermside stores.

[39] In Budden v Finke Enterprises Pty Ltd ATF M&L Carlson Family Trust T/A Fused Café Pender Place [2015] FEC 8675 (Budden), Commissioner Saunders considered whether a sole director of several different entities can ‘control’ those separate entities and found:

“[21] Section 64A of the Corporations Act defines “an entity” to include “a natural person”. It follows, in my view, that Mrs Carlson is “an entity (the third entity)” within the meaning of subsection 50AAA(7) of the Corporations Act. My conclusion in this regard is supported by a decision of Judge Riley of the Federal Circuit Court of Australia in Director of the Fair Work Building Industry Inspectorate v Vic Metro Brick and Blocklaying Pty Ltd [2015] FCCA 2266. In that case, Judge Riley held (at [85]) that a natural person who was the sole director and shareholder of two corporations was “an entity [who] controls both the principal and the associate” within the meaning of subsection 50AAA(7) of the Corporations Act.”

[40] In Salagras v Fingal Glen Pty Ltd atf the Adelaide Riviera Trust T/A Comfort Hotel Adelaide Riviera [2011] FWA 1401 (Salagras), Commissioner Steel considered a scenario where three different hotels were each owned by a separate unit trust and partly managed by an external accounting firm, where each trust shared a single sole director who was employed by the accounting firm. Commissioner Steel considered that the sole director and another employee of the accounting firm:

“[26] …are effectively controlling these trusts and trustee companies as employees of [the accounting firm] and the operations, resources or affairs of those entities are material to [the accounting firm].

[27]…[the accounting firm] being a third entity controls the trustee companies being the principals, as [the director], an employee of [the accounting firm] is the sole director of such companies. The unit trusts, the associates are likewise controlled though the trustee companies by [the director]. The operations, resources or affairs of the principal and the associate are both material to the third party.” 3

[41] In MacInnnes v Gladstone CC Pty Ltd T/A Len Smith Carpet Court[2016] FWC 8838 (MacInnes), Commissioner Booth considered a scenario where the sole director of the Respondent ‘Carpet Court’ store was also the sole director of three other ‘Carpet Court’ stores. Commissioner Booth noted the similarity to Salagras and considered:

“[36] The Corporations Act definition of associated entity includes the control (as defined by s.50AA) by another entity. “Entity” is defined in the s.64A of that Act to include not only other companies but also trusts and individuals. Further ‘control’ is described in s.50AA(1) as “capacity to determine the outcome of decisions about the second entity's financial and operating policies”.

[37] Does then Mr Jack, as sole Director of all 4 companies and other shareholders at the time of termination have the capacity to control the outcome of decisions about entities other than Gladstone CC Pty Ltd?

[38] The notion of control is not restrictive, and extends to, for example a power to veto: Re A Reference to the Federal Court of Australia by the Australian Broadcasting Tribunal Pursuant to Section 22b of the Broadcasting and Television Act 1942 in relation to applications to the Australian Broadcasting Tribunal of Approval [1987] FCA 6, [66] (Full Court, Bowen CJ). Further the test seems not to be limited to operations (for example were decisions of the character ever actually made; did the stores function completely independently), but about the capacity to make such determinations. That capacity will flow from the authority to make determinations rather than historical facts, although past facts might well indicate an actual control, such as joint board meetings.

[39] Here, the entities are owned by the same shareholders and at the time of the dismissal, under the same sole Director, Mr Jack. It is clear that the “capacity to determine the outcome of decisions” about the employer’s financial and operating policies was vested in Mr Jack as sole Director and the shareholders. It follows that the other entities are associated entities within the meaning of s.50AAA.

[40] Additionally, the long service letter exhibited by Mr Johnson indicates that Mr Coughlan’s claim was paid in full, and while the outcome was apparently the product of negotiation, it is not inconsistent with the position put by the Applicant that the entities were related.

[41] In summary, I am satisfied the 4 corporate entities are associated entities on the basis of the common ownership, directorship, and capacity to control the outcome of decisions. [original emphasis]”

[42] In my own decision in Sutton v Solar and Batteries Direct Pty Ltd [2019] FWC 1560 (Solar), I considered whether Mr Parke, the sole director of the respondent in that matter and another entity, could ‘control’ both of those entities pursuant to the test set out in s.50AA of the Corporations Act and the authorities set out above, and considered:

“[56] I have had regard to the capacity that Mr Parke, as the sole director of each entity can exert over the manner in which Solar and Parke Electrical operate, and the practical influence that Mr Parke can exert as opposed to the rights he can enforce. He is ultimately responsible for both businesses.

[57] I consider that the operations, resources or affairs of both Solar and Parke Electrical are material to Mr Parke, and indeed were material on 18 September 2018, insofar as Mr Parke is responsible for the management of each company.

[58] I find that Parke Electrical and Solar are associated entities.”

[43] The circumstances in this matter are congruent with the circumstances that existed in Solar, MacInnes, Salagras, and Budden. Having considered the test of ‘control’ set out in s.50AA of the Corporations Act and the authorities set out above, I am satisfied that Mr Wightman has the capacity to determine the outcome of decisions about each of Tommy Guns Carindale and Tommy Guns Chermside financial and operating policies. Mr Wightman, as the sole director and shareholder of both Tommy Guns Carindale and Tommy Guns Chermside, has the capacity to control both of those entities and has practical influence over both of those entities.

[44] I am satisfied that the operations, resources or affairs of Tommy Guns Carindale and Tommy Guns Chermside are material to Mr Wightman and were material to him on the date of Ms Wright’s dismissal on 25 July 2019.

[45] I find that Tommy Guns Carindale and Tommy Guns Chermside are associated entities.

Was the respondent a small business – did the associated entities together have 15 or more employees?

[46] It is clear on the evidence before me that Tommy Guns Carindale and Tommy Guns Chermside together employed at least 26 employees as at 25 July 2019. Of those 26 employees, 10 were employed on a full-time or part-time basis and the remaining 16 were employed as casual employees, one of whom was Ms Wright. As stated above at [36] I am satisfied that Ms Wright was employed on a regular systemic basis and had a reasonable expectation of continuing employment on such a basis. Although employed on a casual basis, Ms Wright must count towards the total number of employees between Tommy Guns Carindale and Tommy Guns Chermside. For the respondent to have been a small business employer at the time of Ms Wright’s dismissal, a maximum of only three out of the other 15 casual employees must count towards there being 14 or less employees.

[47] The respondent submitted that pursuant to s.23(2)(b) of the Act the casual employees of the Tommy Guns Carindale and Tommy Guns Chermside stores should not be counted in considering whether it was a small business employer at the time of Ms Wright’s dismissal. However, the respondent declined to provide information regarding the hours worked by its employees on a weekly basis as directed by me.

[48] On 21 November 2019, Ms Wright provided the following statement to the Commission, copying in Mr Wightman:

“Kirdes Faasgase is a casual with systematic hours and has worked there well over a year.

Grayson Harold is a casual has systematic hours been there over a year.

Brooke Ramsey is a casual and has systematic hours has been there since the store opened (3 plus years)”

[49] Ms Wright’s correspondence continued, naming many other employees of Tommy Guns Carindale as long-serving casual employees with regular working hours. Ms Wright offered to provide the rosters that she had in her possession to demonstrate that relevant employees could be counted towards the number of employees, which would result in the respondent having 15 or more employees.

[50] There is insufficient information before me regarding the hours worked by the other casual employees of the Tommy Guns Carindale and Tommy Guns Chermside stores. The respondent submitted that the hours worked by the casual employees of the two stores are irregular and change consistently, but provided no evidence in support of its submissions.

[51] As this issue is a contested fact, it is necessary pursuant to s.397 of the Act for the Commission to conduct a hearing in respect of this jurisdictional issue.

Conclusion

[52] The respondent will be, by separate order of the Commission, required to produce time and wages records for all employees at both the Tommy Guns Carindale and Tommy Guns Chermside stores for the period 1 April 2019 to 15 August 2019, including evidence of weekly rosters and a consolidated record of hours worked by each employee for each week during that period.

[53] The respondent will be required, pursuant to the order, to produce the records by no later than 10 January 2020.

[54] A notice of listing will be issued setting a time and date for a hearing before me to consider whether the respondent is a small business.

[55] If the respondent, having reflected on this decision, submits that it will not be able to demonstrate that it is a small business on account of a suitable number of casual employees counting towards the number of employees to be counted as 15 or more, it is appropriate for the respondent to make such a concession and name such employees to the Commission so that the Commission can make such a finding.

COMMISSIONER

Final written submissions:

Applicant, 21 November 2019;

Respondent, 21 November 2019.

Printed by authority of the Commonwealth Government Printer

<PR714956>

 1   Corporations Act 2001 (Cth), s.64A(a).

 2   Corporations Act 2001 (Cth), s.64(b).

 3   Salagras v Fingal Glen Pty Ltd atf the Adelaide Riviera Trust T/A Comfort Hotel Adelaide Riviera [2011] FWA 1401, [26] – [27].