Mr Iain Nicholls v The Trustee for MJ Hooper Trust

[2016] FWC 6700

[2016] FWC 6700

FAIR WORK COMMISSION

DECISION

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

Mr Iain Nicholls
v
The Trustee for MJ Hooper Trust
(U2016/2353)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 22 SEPTEMBER 2016

Application for relief from unfair dismissal – transmission of business – s.384(2) - whether new employer advised period of service with old employer would not be recognised - jurisdictional objections – minimum period of employment – whether dismissal at employer’s initiative – casual contract – no evidence of coercion or duress – whether redundancy and notice owed for prior period of employment as a full time employee – refusal to set aside executed contract of employment.

[1] This decision concerns an application by Mr Iain Nicholls under s.394 of the Fair Work Act 2009 (“the Act”). Mr Nicholls seeks an unfair dismissal remedy in relation to his alleged dismissal from his position as a waiter/cook by his employer, Ms Melissa Hooper, acting for the Trustee for MJ Hooper Trust (“the employer”). The employer is a discretionary trading trust.

[2] I make the point at this early juncture that this matter proceeded to hearing without the appearance of the employer. The employer participated in a Directions hearing on 24 August 2016. The employer also corresponded by email (on 30 August2016) with the Commission thereafter, on matters relating to the Directions timetable. But thereafter the employer did not comply with the Directions timetable and file its materials by 5 PM 6 August September 2016.

[3] It also appears – as Mr Nicholls’ representative indicated at the commencement of the hearing - that the employer’s enterprise has ceased to trade, with public indications being that the restaurant is closed for business, at least currently.

[4] Considerable efforts were made draw the employer’s attention to the statutory processes. A summary of these efforts are as follows:

          Emails

● Email from the Commission to Ms Hooper responding to her email enquiry in relation to clarifying the Directions timetable – 30 August 2016.

● Email from the Commission to Ms Hooper noting she had missed the deadline to file material – 7 September 2016.

● Email from the Commission to Ms Hooper asking if the employer opposes the application made under s.394 of the Act as she had not filed any material yet – noting the Commission would press ahead with the application even if the respondent didn’t reply – 12 September 2016.

● Email from the Commission to Mr Heffernan (carbon copied to Ms Hooper) advising the arbitration date as listed would go ahead, despite the respondent not filing material or responding to emails – 13 September 2016.

● Email from the Commission to Mr Heffernan (carbon copied to Ms Hooper) advising in relation to the way the hearing would be conducted – 14 September 2016.

          Telephone calls with voicemails

● 13 September 2016 3.02 PM.

● 14 September 2016 8.46 AM.

● 15 September 2016 9.14 AM.

● 15 September 2016 3.02 PM.

● 16 September 2016 8.39 AM.

The Evidentiary Argument

[5] Between January 2011 and 29 February 2016, Mr Nicholls performed duties on a full-time basis for his employer, then Jackie Brown Pty Ltd (“the prior employer”).

[6] On or about 1 March 2016, Mr Nicholls claims that he became a transferring employee within the meaning of s.311(3) of the Act. That is, a new franchisee (the employer identified above) took possession of the franchise, albeit under the same parent franchisor.

[7] It is reasonably assumed in such circumstances that the prior employer and the new employer have a connection for the purposes of s.311(3) of the Act. Mr Nicholls gave evidence, and Ms Hooper did not challenge his claims in this respect, that he was never informed that his service with the prior employer would not qualify as service with the new employer (a matter about which I will say more below).

[8] Mr Nicholls gave evidence that his prior employer, in the period immediately prior to the transmission of business, which was held to be 1 March 2016, had explained to him that as a transferring employee, the new employer would accommodate his current position, his accrued personal and carers’ leave and continuity of service (for other accrual related purposes). Mr Nicholls claims he was paid out his accrued annual leave only, upon becoming a transferring employee.

[9] Ms Hooper, for the new employer, was said by Mr Nicholls to have met with the transferring employees on 26 February 2015 (prior to the transmission of business) and explained, according to Mr Nicholls, that it would be “business as usual” upon the transfer of business taking effect. Mr Nicholls claims Ms Hooper said nothing to suggest that Mr Nicholls' full time contract of employment, accrued personal and carers leave, and continuity of employment, would undergo any alteration as a consequence of the transmission. Equally, it is unknown as to what Ms Hooper was referring when she was said to have made her comment as recorded above. Arguably, Ms Hooper was referring only to the way in which the restaurant functions operationally and not to the particulars of the terms and conditions of transferring employees.

[10] Mr Nicholls contends (at least in his viva voce evidence) that after such time as he commenced work with his new employer brought to him an application for a position as a casual employee. It appears on the evidence before me that this decision was communicated to Mr Nicholls on 3 March 2016, which was after the completion of his first shift as a transferring employee. It appears that Ms Hooper adopted the same approach in relation to all the employees.

[11] Mr Nicholls stated in evidence that he queried the change with Ms Hooper but was informed that there must have been confusion, as Ms Hooper understood that a job application would need to be completed for a casual position and seemingly no full time position had been intended to be provided. Notwithstanding this, Mr Nicholls “did not press the matter” with his employer.

[12] It also appears that Mr Nicholls signed a contract of employment as a casual employee. He did not concede this initially in his viva voce evidence (only stating that he had received an application for a position as a casual, as I have said above).

[13] In his written statement, I note, Mr Nicholls made no reference to any application form or a written contract and only states that he was asked to provide his bank details.

[14] It soon became evident to Mr Nicholls that his new employer could not offer him a substantive number of shifts or hours. In this respect, the new employer had only offered Mr Nicholls some three shifts after 1 March 2016 (see further below).

[15] Mr Nicholls took what would appear to be very quick steps to mitigate his losses and obtained new employment in the industry (by 28 March 2016).

[16] On 2 April 2016, Mr Nicholls claimed that Ms Hooper had directed him via an SMS text message to return his uniform and keys to the workplace. Mr Nicholls thereafter enquired as to whether or not he was being dismissed from his employment, which Ms Hooper denied. The messages in respect of this exchange were tendered in evidence. The messages show Mr Nicholls, at his own initiative, to have been capable of making articulate and forceful enquiries of his employer in relation to the terms of his employment.

[17] Following Ms Hooper’s clarification of his employment status, Mr Nicholls claims that he attended the workplace and returned both his uniform and the keys as requested by his employer. Mr Nicholls was informed that the keys were the property of the employer and needed to remain its possession and the uniform was required for another employee to use.

[18] Mr Nicholls was further informed by his employer that there were no hours presently available to Mr Nicholls but that he would receive more hours should they become available in the future.

[19] Thereafter, the employer did not communicate with Mr Nicholls at any time about any offers of further hours of work. Mr Nicholls was not provided any further shifts.

[20] Given that his employer no longer communicated with him and no longer offered him any shifts or work of any kind, Mr Nicholls took the view that the respondent had repudiated the contract of employment at his own initiative. The acceptance of the employer’s repudiation of the contract was said in submission, to have been witnessed by the lodgement of this application under section 394 of the Act on 18 May 2016.

Did the application meet the minimum period of employment?

[21] In this respect, s.384 (2) of the Act provides as follows:

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.

[22] Mr Nicholls relevant period of service at the time he was employed with his new employer must take into account the period of employment dating from 2011 (with the prior employer). Without evidence to the contrary, no other conclusion is available. It cannot therefore be argued that Mr Nicholls’ alleged dismissal took effect within the minimum period of employment as defined by s.383 of the Act (regardless of whether or not the new employer was a small business employer for purposes of s.23 of the Act). The application is jurisdictionally competent in this respect.

Whether application made within the minimum period of time – s.394(2) of the Act

[23] Section 396(a) of the Act stipulates that the Commission firstly must determine if the application before it was made within the prescribed period required in s.394(2) of the Act – that being 21 days. Until this question is resolved, the Commission must not consider the merits of the application.

[24] Where an applicant contends the employment relationship ceased for reason of a constructive dismissal, a question will arise as to whether a particular date and time can reasonably be ascribed the circumstances.

[25] Here, Mr Nicholls formed a view that the delay in offering work was such that he accepted the employer’s repudiation of the contract once it became apparent to him his circumstances would not improve and there would be no further offer of work as a casual employee.

[26] Mr Nicholls’ election to accept the conduct in breach was made and expressed by the making of the application. The date of the constructive dismissal from his position as a casual employee took effect therefore - for the Act’s purposes - the day of the making of the application under s.394 of the Act.

[27] Thus Mr Nicholls’ application was within the time period stipulated by s.394(2)(a) of the Act.

Whether Small Business Fair Dismissal Code applies – s.396(c) of the Act

[28] Section 396(c) of the Act further mandates that the Commission must decide certain matters before considering the merits of the application. One of these matters is whether the dismissal of the Applicant “was consistent with the Small Business Fair Dismissal Code”. Mr Nicholls agreed with the proposition that the employer was at all times a small business (for the purposes of s.23 of the Act). The Small Business Fair Dismissal Code (“the Code”) provides as follows:

388 The Small Business Fair Dismissal Code

(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.

(2) A person’s dismissal was consistent with the Small Business Fair Dismissal Code if:

(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and

(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.

[29] The Small Business Fair Dismissal Code (declared pursuant to the above) provides:

Summary dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Procedural matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.

[30] The employer did not appear at the hearing or make any submission in relation to the Code. The Code cannot be said to have applied in any respect, either in respect of a “Summary Dismissal” or an “Other Dismissal”. Given my ultimate findings, the Code would have had no application in the current circumstances regardless.

[31] Given my findings, it is now necessary to determine whether Mr Nicholls was dismissed for reasons that were harsh, unjust or unreasonable under s.387 of the Act.

[32] Section 387 of the Act provides:

Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person's capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person--whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer's enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.

Consideration

Whether a valid reason – s.387(a)

[33] The paucity of detailed evidence in this matter arising from the absence of the employer from any participation in the substantive proceedings, along with a number of shifting claims by Mr Nicholls, creates some difficulties.

[34] Notwithstanding this, on my reconstruction of the events as they have entered the limited body of evidence, I reach the following findings (on the basis of reasonable inferences and unchallenged claims of Mr Nicholls).

[35] It may be that Mr Nicholls was dismissed from his full time position by Ms Hooper on 3 March 2016 and re-engaged as a casual employee – possibly for reason to avoid the operation of s.117 of the Act, and to obviate the need to make a redundancy payment to Mr Nicholls, in the context of changed operational circumstances.

[36] Equally, it may have been a term of the commercial contract of sale that the employees of the prior employer would be paid out their entitlements, informed that there would be no continuity of service, and be provided with new offers of employment (as Ms Hooper appears to have provided on 3 March 2016). Mr Nicholls did comment in his evidence that Ms Hooper appeared surprised by his claim to be a full time employee, and suggested the transfer of business took place on an entirely different basis.

[37] Much will turn on the detail of the transmission of business and the contractual underpinning to that business process. Absent evidence from the relevant employers, the matter cannot be further illuminated.

[38] Nonetheless, it does appear to me that there is a strong, arguable case that Mr Nicholls has an entitlement owed to him by either the prior or the new employer for payment of redundancy pay (for the period January 2011 – March 2016), along with the requisite period of notice.

[39] It is however, beyond the Commission’s jurisdiction to investigate the matter further, reach such a definitive finding, or to impose an obligation by way of an Order on the employer or the former employer.

[40] That all said, Mr Nicholls thereafter (that is after 3 March 2016) continued as an employee, albeit on a different contract of employment.

[41] It was pressed upon me by submission that the casual employment contract signed by Mr Nicholls should be set aside given such considerations as an asserted inverse power relationship between the parties. It was pressed still further that I should assume that Mr Nicholls’ original position with his prior employer had been maintained throughout, with Ms Hooper effectively dismissing Mr Nicholls (at an indeterminate point between March and May 2016) from his full time position (by failing to offer him work).

[42] But it is difficult not to observe and give weight to the new contract into which Mr Nicholls had entered with his employer. The facts, as I have set them out above, do not show Mr Nicholls to have been subject to coercion or duress in any material sense, or to have been unaware of his interests. Mr Nicholls contested his initial circumstances with his employer when presented with an application for employment as a casual. He nonetheless, on his own evidence, thereafter signed the contract as a casual employee. The SMS messages show that Mr Nicholls was quick to act on his interests, in that he showed a preparedness to resist and challenge any threat to his employment status, and he also made demands of his employer. Further, Mr Nicholls initiated rapid action to acquire alternative work, promptly upon his hours declining (in March 2016).

[43] These circumstances do not suggest to me that Mr Nicholls entered into a contract of employment by mistake, under duress, without knowledge or insight as to his situation or without regard to his interests or a capacity to assert those interests.

[44] Further, Mr Nicholls did not present to the Commission any evidence or testimony to support the Commission putting aside the new contract, despite providing a witness statement and giving evidence under oath during the hearing. On the contrary, Mr Nicholls explained that he was aware that the offer of employment from the new employer was as a casual employee, considered his options and decided to accept the offer despite holding some reservations (owing to his comprehension of the different conditions of employment between his present full time role and the proposed casual employment). Mr Nicholls original contract of employment with his prior employer could not survive such a body of circumstances.

[45] Ultimately, as a casual employee engaged as such for only a limited period of time and who was offered only irregular and very small numbers of shifts, Mr Nicholls employment came to an end for reason of lack of work, as Mr Nicholls’ employer explained to him. No other factors (such as conduct or performance) were said by Mr Nicholls to be relevant to his employment, which adds strength to grounds for the inference to this end. The fact that it also appears that the business is not currently trading, may provide further support to such a conclusion.

[46] Because Mr Nicholls’ employment came to an end for reason he was no longer offered any engagements owing to a lack of available work, it follows that there was no valid reason for Mr Nicholls’ dismissal for reason of his conduct or capacity, for the purposes of s.387(a) of the Act. This is because, s.387(a) of the Act is not a relevant consideration when an employee is terminated for operational reason. The operational reason is a relevant consideration, however for purposes of s.387(h) of the Act (see UES (Int'l) Pty Ltd v Leevan Harvey[2012] FWAFB 5241 (14 August 2012)).

Whether the person was notified of that reason - s.387(b)

[47] Mr Nicholls was given no notice as to any valid reason for his constructive dismissal.

Whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person- s.387(c)

[48] No opportunity was provided to Mr Nicholls to respond to any valid reason given for his dismissal.

Any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal- s.387(d)

[49] The circumstances of the case do not attract consideration of the subsection.

If the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal- s.387(e)

[50] Again, the circumstances of the case do not warrant consideration of the subsection.

The degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal- s.387(f)

[51] Subject to what I say below in relation to s.387(g) of the Act, the employer’s enterprise was small in size. It is reasonably concluded that the size of the enterprise may have impacted on the procedures applied by the employer, subject to the comments immediately below.

The degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal- s.387(g)

[52] The employer did not attend the proceeding to explain its circumstances. As a franchise there is some likelihood that the employer may have had access to the Franchisor’s human resource expertise, but this is speculation. It would be reasonable to assume the employer itself had no “dedicated” human resource expertise within its own immediate business and that this may have impacted on the procedures affecting the dismissal.

Any other matters that the FWC considers relevant

[53] As I have set out above, Mr Nicholls’ employment as a casual for a short period with the employer came to an end for an operational reason, being an unavailability or shortage of work. This is a sound and defensible reason for an employer to bring an employment relationship to an end. (see UES (Int'l) Pty Ltd v Leevan Harvey[2012] FWAFB 5241 (14 August 2012)).There are no other circumstances that attract my comment or consideration.

Conclusion

[54] Upon consideration of the circumstances of this matter, on balance I find that Mr Nicholls was not harshly, unjustly or unreasonably dismissed. Mr Nicholls’ judgment in entering and executing the casual contract of employment was not in some manner suborned by his employer’s will: the surrounding circumstances do not sustain such a finding (see above). I add that Mr Nicholls demonstrated initiative in obtaining alternative employment quickly when his hours declined and he showed too that he could make enquiries of his employer about his employment status without fear or concern. The SMS exchanges between Mr Nicholls and his employer tended in evidence suggest this sufficient clearly. I make further comment about this matter above (see also [42] – [45] above).

[55] Mr Nicholls, on his own evidence, ceased to be engaged as a casual employee because there were no further hours of work available to him, in a context in which no other conduct or performance issues were afoot which mediated the employer’s decision making. It seems too that his employer has closed its doors in recent times. In my view, Mr Nicholls’ employment as a casual employee ceased for a sound and defensible reason – operational circumstances.

[56] I therefore dismiss Mr Nicholls’ application under s.394 of the Act.

[57] Notwithstanding this, I have highlighted above that I consider that the circumstances of Mr Nicholls’ cessation of work as a full time employee is problematic and may have given rise to circumstances which warrant the payment of both redundancy pay and notice (in respect of which the Commission has no jurisdictional province). Mr Nicholls has avenues for pursuing the relevant claims in the Court.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr Heffernan, Paid Agent, for the Applicant.

The Respondent did not appear.

Hearing details:

Brisbane

16 September 2016

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