Mr Daniel Newberry v Three Two Three Pty Ltd T/A X Cargo

[2021] FWC 4515

[2021] FWC 4515

FAIR WORK COMMISSION

DECISION

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

Mr Daniel Newberry
v
Three Two Three Pty Ltd T/A X Cargo
(U2020/15576)

COMMISSIONER RIORDAN SYDNEY, 27 JULY 2021

Application for an unfair dismissal remedy

[1] On 4 December 2020, Mr Daniel Newberry (the Applicant) lodged an unfair dismissal application (the Application) pursuant to s 394 of the Fair Work Act 2009 (Act) claiming that he had been unfairly dismissed by Three Two Three Pty Ltd (the Respondent).

[2] The Respondent raised a jurisdictional objection to the Application, stating that the Applicant was not employed for the minimum employment period of six months prior to the termination.

[3] The matter was allocated to Commissioner Booth on the 2 February 2021, where a conference occurred on the 11 March 2021. The matter remained unresolved, and directions were subsequently issued requiring the parties to file submissions regarding the jurisdictional issue.

[4] Due to the Commissioner taking a period of personal leave, the matter was then reallocated to me for determination on 22 April 2021.

[5] In response to Vice President Catanzariti’s request, the Applicant provided submissions and a witness statement on the 1^st of February 2021.

[6] The Applicant claimed that, despite his employment being transferred between three employers, he was employed from 16 October 2019 to 3 December 2020 for a continuous period of 1 year, 1 month and 18 days. The Applicant also submitted that the transfer from McLaughlin Street Holdings Pty Ltd, trading as X Cargo (MSH) to Three Two Three (323) was a transfer of employment between non-associated entities, and the transfer of employment from 323 to 323 Services was a transfer of employment between associated entities. 

Background

[7] The Applicant commenced employment with MSH as its Business Development Manager on 16 October 2019. The Applicant’s employment contract was signed by the Managing Director of MSH, Mr Angus Cattanach.

[8] On 2 October 2019, MSH signed a contract with an associated entity, All Services Group Pty Ltd (ASG), to provide labour to MSH. There is no record of the Applicant being employed by ASG, however, the pay slips that were provided to the Applicant were from ASG. There is no dispute that there is no relationship between ASG and the Respondent.

[9] On 3 March 2020, Mr Ayden Sturgess, a Director of MSH, established the Respondent.

[10] On 4 March 2020, the Respondent purchased the X Cargo business from MSH. The contract for the purchase of the business contains a section for the parties to list the names of any transferring employees (Clause 18, section Y). This section of the contract does not list the names of any employee.

[11] The Applicant continued to work as the Business Development Manager at X Cargo until the business closed due to Covid 19 restrictions on 23 March 2020.

[12] The Applicant was not on any list of employees issued with separation certificates at this point in time from ASG. It is not in dispute that the Applicant continued to be paid by ASG up until this date.

[13] The Applicant claims that he continued to work for the Respondent, without wages, on the understanding that he would be backpaid when X Cargo reopens.

[14] The Respondent registered an associated entity known as Three Two Three Services Pty Ltd (323 Services) on 18 August 2020. This Company was used by the Respondent to employ the employee’s who worked at X Cargo. The Applicant’s first payslip was from 323 Services for the period from 18 August 2020. I note that the payment was received five months after the Applicant’s last day of full-time work on 23 March 2020.

[15] The Applicant was terminated by the Respondent or its associated entity, on 3 December 2020.

[16] The Applicant claims that he worked for the Respondent and its associated entities for more then 12 months. The Respondent claims that the Applicant was employed for approximately 4 months.

Legislation

[17] For an employee to gain access to the unfair dismissal jurisdiction of the Commission they must satisfy the minimum employment provisions of the Act;

Section 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

[18] It is not in dispute that the Respondent was not a small business at the time of the Applicant’s termination. Section 383 of the Fair Work Act, 2009 (the Act) states;

Section 383

Meaning of minimum employment period

(b)   if the employer is a small business employer--one year ending at that time.

[19] The relevant section of the Act in relation to the status of employees who transferred between employers is section 22, which states;

Section 22

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.

Submissions and Evidence

[20] The Applicant asserted that his employment was transferred between three employers, namely, MSH, 323 and 323 Services and that his employment was continuous.

[21] The Applicant claimed that he never worked for ASG, whom he thought was his outsourced payroll provider whilst working for MSH.
[22] The Applicant stated that he continued to work for the Respondent throughout the lockdown, undertaking promotional, marketing and maintenance functions. The Applicant stated that he had a verbal understanding with Mr Sturgess that he would be backpaid for this work.

[23] The Applicant acknowledged that during the lockdown period that he claimed Job Seeker whilst at the same time doing unpaid work for his father’s brewery business and establishing his own “hobby business” called Glow Get Co.

[24] I understand that employees who were stood down during the pandemic in 2020 were eligible for Job Seeker if their employer did not satisfy the requirement for the Job Keeper program.

[25] The unchallenged evidence of Mr Sturgess is that he purchased X Cargo in the knowledge that it would be closed down in a few weeks. It would be highly unlikely that an employer would take on the liability and responsibility of any staff in such a scenario.

[26] Mr Rodney Caldicott is the accountant engaged by the Respondent. Mr Caldicott stated 1;

“1. I am an Accountant engaged by the Respondent and Three Two Three Pty Ltd (“323”).

2. I make this statement in relation to the involvement of 323 with the Applicant and in relation to the Fair Work Proceeding that has been brought by him against the Respondent.

3. I confirm that 323:

(a) Does not have any PAYG Withholding liability;

(b) Did not employ the Applicant at any stage; and

(c) Has not employed any staff.

4. At the time 323 purchased the Business, being the X Cargo Nightclub from the previous operator McLachlan Street Holdings Pty Ltd t/as X Cargo (“MSH”), no employees were transferred from the entity, All Services Group (ASG) Pty Ltd (“ASG”) to 323 or any related entity.

5. As the Respondent was not registered until 18 August 2020, the Applicant was not employed until this date. However, at the direction of Sturgess, the Applicant was back paid his fulltime salary from 10 August 2020. Attached is a copy of the Applicant’s first payslip that confirms this (“Attachment RC-1”).

6. In or around late August 2020 I was made aware via an email from Jackson McGuire that the Director of the Respondent, Aydan Sturgess (“Sturgess”) had agreed to grant a small number of employees, including the Applicant, additional leave entitlements that were the equivalent of entitlements that had not been paid by ASG.

7. I approached Sturgess and advised him that there was no obligation for the Respondent to pay or honour such entitlements as they were liabilities that rested solely with ASG.

8. Despite my advice, Sturgess advised that he wanted to ‘look after’ those staff members (which included the Applicant) who had not been paid out properly by ASG and as a gesture of good will had agreed with them that the Respondent would grant them the equivalent annual leave benefits not paid by ASG.”

[27] Mr McGuire was the Venue Manager of X Cargo employed previously by ASG. Mr McGuire stated 2 that;

“2. I am aware that in or around early-March 2020 there was an agreement to transfer the X Cargo Business to a company that was owned by Mr Aydan Sturgess (“Sturgess”).

3. In or around late-March 2020 I was informed that the Business would be closing down and that all of the staff (including myself) were to be terminated.

4. Separation certificates were to be organised by ASG or the Directors of MSH, Angus and Leah Cattanach but I am unaware if these were eventually issued to staff.

5. Ultimately, all of the staff that were previously employed in the X Cargo Business were terminated at some time in or around late-March.

6. I am aware that the Business ceased trading and closed on or about 22 March 2020. Shortly after that I applied for and was granted Job Seeker payments.

7. Although I was paid by ASG up to the time which the Business ceased trading, I was not paid any of my leave entitlements by ASG.

8. In or around April 2020, I made enquiries with Angus and Leah Cattanach and of Aydan Sturgess as to when my leave benefits would be paid by ASG. I was told by Angus and Leah Cattanach that this was the responsibility of ASG.

9. In the period between 23 March 2020 and when the Business re-opened in August 2020, a number of staff members attended the Business premises to socialise from time to time.

10. I am aware that the Applicant attended the Business premises on a few occasions during this period as he was running a live music streaming event from the Premises.

11. In or around mid-July and early-August 2020 I was advised by Sturgess that due to the changes in COVID-19 restrictions, the Business was likely to be able to re-open sometime in mid to late August.

12. At this time I advised Aydan Sturgess that if I was to come to work for his business then I wanted some arrangements to be put in place to compensate me for my leave benefits that ASG had not paid.

13. Sturgess agreed that if I, as well as two other employees being the Applicant and a Mr Sam Jackson agreed to come and work for the Respondent then, although he could not agree to pay the leave benefits, he would agree to a grant of annual leave equivalent to that which had not been paid by ASG.

14. I advised Sturgess that this was a condition of me coming to work for him as I had over 200 hours of annual leave that had not been paid by ASG.

15. Prior to the Business reopening I offered to assist Sturgess with the set up of the business so that trading could be recommenced.

16. I received approximately a week of “back pay” for work that I had performed prior to the Business reopening as part of my initial pay (and in addition to the grant of annual leave).”

[28] Mr Sturgess claimed that the 6 live stream music events undertaken by the Applicant at X Cargo during the shutdown period were undertaken for the benefit of the Applicant, not the Respondent. Further, Mr Sturgess claimed that the Applicant sought his advice in relation to setting up his business and assisted in painting a fence for 20 minutes whilst conducting a casual conversation.

[29] The Applicant provided a number of screen shots of his phone which indicated his activity for the Respondent during the lockdown. The Applicant claimed that he continued to work “as usual” for the Respondent during this period.

[30] The Applicant supplied an email from Mr Sturgess to a property manager on behalf of the Applicant, stating that the Applicant had been employed as his Business Development Manager for 18 months.

Consideration

[31] I have taken into account all of the submissions and evidence that have been provided by the parties. The fact that an issue has not been mentioned in this decision does not mean that it has not been taken into account.

Determination

[32] This is a difficult and complex matter due to the poor business records that have been kept by a number of businesses involved either in the proceeding or on the periphery of the proceeding.

[33] It is not beyond the realm of possibility that the Applicant worked for MSH and not ASG. The Applicant had a signed contract with the Managing Director of MSH which was made a few weeks after the contract was signed between MSH and ASG. If MSH wanted the Applicant to be employed by ASG, I am in no doubt this scenario would have been mentioned during the employment process. I note that the services contract between MSH and ASG allowed for individuals to be employed directly by MSH.

[34] If this was true, then the Applicant could not be provided with a separation certificate from ASG because he had never been employed by ASG. At the time of the sale of X Cargo, the Applicant’s employment seems to have been ignored or overlooked by MSH. The Business Sale Contract clearly shows that no employees transferred from MSH to the Respondent as part of the sale. The unchallenged evidence of Mr Caldicott is that the Respondent did not employ the Applicant at any stage, nor did it have any PAYG Withholding Liability. In simple terms, the employment status of the Applicant at the point of sale of X Cargo, was the responsibility of MSH. MSH had the obligation to negotiate the Applicant’s transfer to the Respondent or to issue him with a Separation Certificate. It would appear that MSH failed to do either. It may well be that MSH expected the Applicant to transfer to the Respondent at the point of the sale, but there is no evidence of this expectation.

[35] It is also possible that the Applicant actually worked for ASG and that his situation was identical to that of Mr McGuire, ie, their employment terminated with ASG. It is also not beyond the realms of possibility that MSH simply transferred the Applicant to ASG without his knowledge or approval. The fact that the Applicant was paid by ASG whilst working for MSH was certainly unusual. It would appear that Mr McGuire also failed to receive a Separation Certificate from ASG.

[36] I am satisfied and find that the Applicant did not work in a full time “business as usual” capacity during the COVD lockdown. A few random hours of developmental or promotional activity, which also benefited the Applicant’s new business or that of his father, does not generate sufficient activity to satisfy any criteria that the Applicant was working full time for the Respondent.

Conclusion

[37] It may well be that the Applicant’s employment continuity was the subject of a Covid 19 intervention. Perhaps his employment would have continued throughout May-August except for the closure of entertainment venues such as X Cargo. However, the Applicant did not provide a copy of any Job Keeper Enabling Direction from the Respondent or a copy of his Job Seeker application. I am unaware of the reason given by the Applicant on his Job Seeker application as to the reason for his claim.

[38] For the reasons identified above, I am satisfied that the Respondent is not an associated entity of either MSH or ASG. I am satisfied that there was no transfer of employment between either of these entities and the Respondent.

[39] The Applicant’s employment commenced with the Respondent (323 Services) in August 2020 and concluded on 3 December 2020. As a result, the Applicant does not satisfy the minimum employment period provisions of the Act and is therefore statute barred from bringing an unfair dismissal application against the Respondent.

[40] The jurisdictional objection of the Respondent is upheld.

[41] The substantive application by the Applicant is dismissed.

COMMISSIONER

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 1   Court book page 243 - Witness Statement of Rodney Caldicott at PN[1]-[8]

 2   Court Book page 240 - Witness Statement of Jackson McGuire at PN[2]-[16]