Mr Mark Tonner-Joyce v SalesFix Pty Ltd as Trustee for the Lawrence Family Trust

[2019] FWC 7552

[2019] FWC 7552

FAIR WORK COMMISSION

DECISION

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

Mr Mark Tonner-Joyce
v
SalesFix Pty Ltd as Trustee for the Lawrence Family Trust
(U2019/7764)

COMMISSIONER MCKINNON MELBOURNE, 31 OCTOBER 2019

Unfair dismissal – jurisdictional objection – minimum employment period – small business –Director as employee.

[1] After seven years of growth in the Brisbane market, SalesFix Pty Ltd decided to establish a presence in Melbourne. The company operates an information technology consulting business, specialising in Salesforce implementation and integration. 1

[2] As part of its expansion plans, SalesFix employed Mark Tonner-Joyce on 2 July 2018 in the role of Victoria Practice Lead / General Manager – Victoria. He worked for almost 12 months before his employment was terminated on the grounds of redundancy on 24 June 2019.

[3] Mr Tonner-Joyce says his role was not genuinely redundant. He seeks the opportunity to establish that his dismissal was unfair so that he can obtain a remedy of reinstatement or compensation as well as the payment of outstanding bonuses.

[4] To have that opportunity, he must have completed the minimum period of employment as an employee of SalesFix. The relevant period is 12 months for employees of small business employers and 6 months for those employed by employers with 15 or more employees. If SalesFix was a small business employer at the time of his dismissal, he cannot bring his claim.

[5] There is no dispute that SalesFix had at least 14 employees at the relevant time. Mr Tonner-Joyce says that because Jason Lawrence is also an employee of the business, the total number of employees was 15. Mr Lawrence does not agree.

[6] Mr Lawrence is the founder and sole director of SalesFix, which is the Trustee for the Lawrence Family Trust. Naturally, he has an active role in the business. It is his business. He has a personal interest in its success. But is he also one of its employees?

Is Mr Lawrence an employee of SalesFix?

[7] In describing his relationship with the business, Mr Lawrence uses the titles of Managing Director and Senior Solutions Consultant – Founder interchangeably. He also uses the title of CEO on a business YouTube channel. The title used varies depending on the relevant audience.

[8] Mr Lawrence devotes most of his time to working for the business. He does so in a way that is entirely flexible – in his own words, “I decide what I do, when I do it, where I do it and how much I get involved or don’t get involved, how much I rely on the management team and the consultants to do their work. As I see fit.” 2 He describes himself as “business owner and part of the team”.

[9] An employee is someone who works for a business firm or for another person for pay. 3 The director of a company can also be its employee4 if there is a contract of service between them.5 In each case, the true character of the relationship must be ascertained. A contract that can be carried out otherwise than by personal service – for example, because it permits unlimited delegation of duties or provides for payment by results without compelling the performance of work – will not be a contract of service.6

[10] In ascertaining the nature of the relationship, it is useful to consider the principles established in relation to the similar, but different, question of whether a person is an employee or a contractor 7 as it also turns on whether a relationship can properly be characterised as a contract of service.

Factors suggesting Mr Lawrence is an employee

[11] It can safely be assumed that Mr Lawrence was appointed to the role of Managing Director. As the only member of the SalesFix board, he had the power to appoint himself.

[12] In his capacity as Senior Salesforce Consultant, he works “on the tools” on Salesforce-related activities and implementation work. Depending on the client and complexity of work, he has direct contact with SalesFix clients. He guides employees through complex solutions and provides them with the technical support they need. He is a member of the national management team and national sales team.

[13] Tools, equipment and business expenses: All of the business equipment and resources Mr Lawrence needs to undertake his work are provided by SalesFix, including training costs, mobile phone, internet and reimbursement for travel expenses. In this sense, he has an ‘economic dependence’ on the business. For employees, SalesFix reimburses some, but not all, expenses. There is a “bring your own device” policy.

[14] Emanation of the business: Mr Lawrence holds himself out as an emanation of SalesFix. Sometimes, though not often, he wears branded corporate shirts. He uses the SalesFix logo on his signature block and is directly linked to SalesFix in his social media profiles and marketing material.

[15] Remuneration and income tax: Mr Lawrence does not draw a regular wage or salary and does not declare PAYG income. Instead, he receives monthly franked trust distributions and declares that income at the end of each financial year. While this arrangement may be more tax effective, as a matter of economic reality he receives $10,000 per month from SalesFix.

[16] Leave: Mr Lawrence takes leave when he chooses. An examination of the trust ledgers demonstrates that his absence from work does not affect his monthly drawing. In that sense, his holidays are without loss of pay.

[17] Goodwill: Mr Lawrence spends much of his working time building goodwill for the business of SalesFix and takes responsibility for building sales and business opportunities. He estimates that he brings in less than half of new business. He aims to grow the business so that it is successful and his earnings increase.

Factors suggesting Mr Lawrence is not an employee

[18] Mr Lawrence has financial control of the business. Subject to law and presumably also a Trust Deed, he has absolute discretion in financial dealings related to SalesFix. He authorises business expenditure which must be consistent with company policy.

[19] Control: Mr Lawrence has complete autonomy in how, when and where he provides his services to SalesFix and what services he provides. He decides if, and when, he should be paid. If there is any right of control in the relationship, it is exercised in the manner of ‘self-control’ and subject only to Mr Lawrence’s obligations as director and trustee. No other member of the SalesFix management team has such freedom. In this sense, he has unlimited capacity to delegate his work. He could choose to hand over his executive functions to another. Such freedom is curtailed by his duties as a director, which require him to act with due care and diligence and in good faith in the best interests of the business. He cannot simply walk away from the business without consequence.

[20] Mr Lawrence oversees but is not in charge of day to day business operations – at the time of dismissal, those functions fell to Nicola Hungerford (Head of Delivery) and Karen Matheson (Office Manager). He does, however, interact with staff on operational matters. He is responsible for recruitment decisions and the engagement of contractors. He sets internal business targets and manages the performance of his direct reports.

[21] Work for others: Mr Lawrence can work for others and sometimes does.

[22] Place of work and advertising own services: Mr Lawrence can work wherever he likes. He advertises his services to the world at large, both as an emanation of SalesFix and as a credentialled Salesforce “MVP”. In contrast, Mr Tonner-Joyce (and it appears, other employees of the business) have a primary place of work.

[23] Delegation or subcontracting: Mr Lawrence can and does delegate whatever tasks he chooses to others. By way of comparison, Mr Tonner-Joyce is prohibited from doing so without consent in writing.

[24] Rights to suspend or dismiss: putting aside matters of corporations law, for so long as he remains the sole director of SalesFix, the only person who can suspend or dismiss Mr Lawrence is himself.

Neutral criteria

[25] Distinct profession, trade or calling: the specialist skills held by Mr Lawrence are able to be used both independently of a business and within one. In practice, that is also what occurs – while Mr Lawrence devotes most of his time in applying his skills to SalesFix, there are occasions where he applies those skills for the benefit of others (when performing work as an MVP for Salesforce).

Conclusion

[26] Some of the facts in this case tend in favour of an employment relationship and some do not. As a practical matter, Mr Lawrence both runs his own business and works in that business by providing his personal services to it.

[27] Clearly, he has independence in the conduct of his operations, but he is not running any business separate to SalesFix. In the overwhelming proportion of his activities, he is a representative of SalesFix. He derives an income and other benefits from SalesFix and is economically dependent on it.

[28] On balance, and separate to his relationship of director, I find that there is an employment relationship between Mr Lawrence and SalesFix and that it was in existence at the time of Mr Tonner-Joyce’s dismissal.

Result and Disposition

[29] The result is that SalesFix had 15 employees at the time of dismissal. It was not a small business employer. 8 Mr Tonner-Joyce has completed the minimum employment period of 6 months and can bring his claim.

[30] The matter will be referred for further programming.

COMMISSIONER

Appearances:

P Ferguson for the Applicant

J Lawrence for the Respondent

Hearing details:

2019

Melbourne and Brisbane (video hearing):

September 11.

Printed by authority of the Commonwealth Government Printer

<PR713930>

 1   Exhibit 5.

 2   Transcript, 11 September 2019.

 3   Macquarie Dictionary (online at 31 October 2019) ‘employee’.

 4   Anderson v James Sutherland [Peterhead] Ltd [1941] SC 203; Lincoln Mills (Aust) Ltd v Gough [1964] VR 193; Wilson v B.A.R.B Trading T/A Gelatissimo Townsville[2016] FWC 3841.

 5   Te Raki and Te Raki v Peloton Sportz Pty Ltd T/A Carine and Cottesloe Cycles[2016] FWC 4215.

 6   ACE Insurance Limited v Trifunovski [2013] FCAFC 3.

 7   See, for example, Abdalla v Viewdaze Pty Ltd[2003] AIRC 504.

 8   Fair Work Act 2009 (Cth), s.23; s.388.