Mr Michael Cincotta v Coffee Management and Solutions Pty Ltd

[2015] FWC 5021

[2015] FWC 5021

FAIR WORK COMMISSION

DECISION

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

Mr Michael Cincotta
v
Coffee Management and Solutions Pty Ltd
(U2015/2743)

DEPUTY PRESIDENT BOOTH SYDNEY, 27 JULY 2015

Application for relief from unfair dismissal – jurisdictional objection - minimum employment period – transfer of employment – jurisdictional objection dismissed.

[1] Mr Cincotta worked for Coffee Management and Solutions Pty Ltd (Coffee Management) when he was dismissed on 14 January 2015. He has made an application to the Fair Work Commission for an unfair dismissal remedy. Coffee Management object to his application on the ground that Mr Cincotta is not a person protected from unfair dismissal because he has not served the minimum employment period. The parties agree that Coffee Management is a Small Business Employer and the minimum employment period for a Small Business Employer is one year.

[2] Mr Cincotta also worked for The Coffee Galleria Pty Ltd (Coffee Galleria). He commenced employment with Coffee Galleria on either 21 or 26 June 2013. He contends that Coffee Management continued to conduct the business of Coffee Galleria from, at the latest, 25 June 2014 to the time of his dismissal on 14 January 2015.

[3] The question to be determined is does Mr Cincotta’s service with Coffee Galleria count as service with Coffee Management for the purpose of the minimum employment period? If the answer to this question is yes, he has served the minimum employment period and his application can be heard on the merits. If the answer to this question is no, he has not served the minimum employment period and his application must be dismissed.

[4] By permission of the Commission Mr Cincotta was represented by Mr Maiorana, solicitor and Coffee Management were represented by Mr Laface, solicitor.

[5] Coffee Management bear the onus of satisfying me that their jurisdictional objection is made out. That is, that Mr Cincotta did not serve the minimum employment period. At the same time Mr Cincotta must satisfy me that he is a person protected from unfair dismissal pursuant to s.382 of the Fair Work Act 2009. To that end, it is agreed that Mr Cincotta was an employee for the purposes of s382(a) of the Act. It is also agreed that Mr Cincotta earned $24.60 per hour, therefore falling below the high income threshold satisfying s.382(b). Accordingly, the only issue arising for Mr Cincotta, is whether he had served the minimum employment period.

[6] Coffee Management was not as engaged in the conduct of this matter as would have been optimal. They did not attend a conciliation listed for 25 February 2015. A second conciliation was offered to replace the first conciliation and they did not reply. They did not provide a Form F3 Response to the application until 8 May, received by Mr Cincotta and the Commission just before the matter was listed for merits arbitration by me on 13 May 2015. The first time either Mr Cincotta or the Commission knew that there was a jurisdictional objection was when the F3 was received. This necessitated the adjournment of the hearing and, due in part to my absence on scheduled leave, the jurisdictional objection could not be heard until 13 July 2015. Orders requiring production of documents dated 18 June 2015 were served by Mr Cincotta’s representative however, Mr Laface submitted that the envelope containing the Orders was not opened by his office until 7 July and it was not practical to comply with the Order ahead of this hearing. No other organisation upon which the Orders were served complied with the Orders either. Mr Cincotta did not press the Orders, preferring to conclude the matter in the hearing before me without further adjournment. Coffee Management did not put forward any oral evidence and mounted its jurisdictional objection largely based on Mr Cincotta’s evidence.

[7] Based on the submissions and evidence before me, for the reasons set out below, I have decided that Mr Cincotta’s service with Coffee Galleria does count as service with Coffee Management.

Relevant legislative requirements

[8] The Fair Work Act 2009 provides that a person is protected from unfair dismissal if, amongst other things, they have completed a period of employment of at least the minimum employment period. 1 The minimum employment period is one year for a small business employer.2 An employer is a small business employer if at the time of the relevant dismissal they employ less than 15 employees.3 The period of employment is the period of continuous service the employee has completed with the employer.4 A period of service is the period during which the employee is employed by the employer.5 A period of service as a casual employee only counts if the casual employee was employed on a regular and systematic basis with a reasonable expectation of continuing employment on a regular and systematic basis.6 A period of service includes a period of service with a prior employer if there is a transfer of employment between the first employer and the second employer.7

[9] A transfer of employment occurs when either of the following two conditions are satisfied: 8

1. The first and second employers are associated entities and the employee becomes employed by the second employer within three months of ceasing employment with the first employer. According to s.50AAA of the Corporations Act, two entities are said to be associated entities if:

a) the entities are related bodies corporate; or
b) the principal controls the associate; or
c) the associate controls the principal and the operations, resources or affairs of the principal are material to the associate; or
d) the associate has a qualifying investment in the principal and the associate has significant interest over the principal and the interest is material to the associate; or
e) the principal has a qualifying investment in the associate and the principal has significant interest over the associate and the interest is material to the principal; or
f) a third entity controls both the principal and the associate and the operations, resources or affairs of the principal are material to the third entity. 9

2. The first and second employer are not associated entities but a transfer of business has occurred between the first (the old) and the second (the new) employer whereby the employee becomes a transferring employee. A transfer of business occurs when the employment of the employee with the old employer has been terminated, the employee becomes employed by the new employer within three months of ceasing employment with the old employer, the work the employee is performing for the new employer is the same or substantially the same as the work they were performing for old employer and there is a connection between the old and the new employer. 10

[10] In order to satisfy the first condition Coffee Galleria and Coffee Management would need to be associated entities and Mr Cincotta would need to have been employed by Coffee Management within 3 months of ceasing employment with Coffee Galleria.

Were Coffee Galleria and Coffee Management associated entities?

[11] According to the Australian Securities and Investments Commission (ASIC) extract, contained in the statement of Mr Matthew Ross Maiorana, (representative of Mr Cincotta) Coffee Galleria was registered on 24 June 2010 and remains registered. The sole shareholder of Coffee Galleria is Darina Hoferek, Unit 12/86 Falconer Street West Ryde 2114. Its Director is Darina Hoferek, Unit 12/86 Falconer Street West Ryde 2114. Its secretary is Anthony Matthew Mastro, 77 Wharf Road Gladeville 2111. Its registered office is Unit 12/86 Falconer Street West Ryde 2114. Its place of business is Unit 12/86 Falconer Street West Ryde 2114.

[12] According to ASIC’s extract, contained in the Statement of Mr Nicholas Mastro (employee of Coffee Management) Coffee Management was registered on 13 February 2014 and remains registered. The sole shareholder of Coffee Management is Darina Hoferek, Unit 12/86 Falconer Street West Ryde 2114. Its Director is Ingrid Nagy, Unit 1 Old Burleigh Road Surfers Paradise 4217. Its secretary is also Ingrid Nagy at the same address. Its registered office is Mark Schiliro and Associates (MNSA) Pty Ltd, Level 1/283 George Street Sydney 2000. Its principal place of business is Unit 12/86 Falconer Street West Ryde 2114.

[13] Mr Maiorana submitted that the two companies were associated entities because Mr Mastro, who held himself out to be Mr Cincotta’s boss, was the secretary of Coffee Galleria and an employee of Coffee Management with a long history in coffee businesses. Mr Laface submitted that just because there was a common employee between businesses this did not mean they were associated entities.

[14] It is apparent from the ASIC extracts that both companies are owned by the same sole shareholder and share the same principal place of business. The common ownership of both companies satisfies me that they are associated entities because they meet the conditions of s.50AAA Corporations Act (3) to (6) summarised at paragraph 9(1)(b) to (e) above. This is because control of both entities, as defined in s.50AA of the Corporations Act, rests with the same individual who is the owner of both entities.

Was there a break in Mr Cincotta’s employment of more than 3 months?

[15] It is not in dispute that Mr Cincotta was employed by Coffee Galleria from at least 26 June 2013 11 to 18 March 2014 and employed by Coffee Management from 25 June 2014 to the time of his dismissal. Mr Cincotta’s payslips were in evidence for these two periods. Although he could not provide pay slips for the period 19 March 2014 to 24 June 2014 his evidence was that his employment was never explicitly terminated by Coffee Galleria and he continued to work as usual at the same location for the same manager, Mr Mastro, during the entire period, including the period when his pay slips changed from being in the name of Coffee Galleria to being in the name of Coffee Management. No evidence was given by Coffee Management and no submission was made concerning what occurred during this period, other than to put to Mr Cincotta under cross examination that he was lying about continuing to work during this period. I found Mr Cincotta to be a responsive and plausible witness who was ready and willing to provide his bank statements to corroborate his evidence when asked by me. Coffee Management did not call for these documents. I accept Mr Cincotta’s evidence.

[16] I find that it is more likely than not that there was no practical break in Mr Cincotta’s work between his employment with Coffee Galleria and Coffee Management.

[17] Accordingly, I conclude that a transfer of employment can be held to have occurred between associated entities.

[18] However in case I am wrong about Coffee Galleria and Coffee Management being associated entities, it is prudent to examine the second circumstance in which a transfer of employment is held to have occurred, that is, where there is a transfer of business.

Was there a transfer of business between Coffee Galleria and Coffee Management?

[19] I am satisfied that Mr Cincotta’s employment ceased with Coffee Galleria by the time his payslips show his employer as Coffee Management. As I have already said I am satisfied that he was employed by Coffee Management within 3 months of ceasing employment with Coffee Galleria because I accept his evidence that he continued to work beyond the date of the last payslip that he could provide and that there was no practical break in his work between his employment with Coffee Galleria and Coffee Management. I am satisfied that the work he performed for Coffee Management was the same or substantially the same as the work he performed for Coffee Galleria. Mr Cincotta’s evidence was that he commenced as a driver and was moved to the warehouse when he lost his driver’s licence due to an accumulation of driving infringement points on 23 July 2014. I accept this evidence. Accordingly, I am satisfied the conditions of s. 311(a) to (c) of the Act are met. The last element of the conditions that would need to be satisfied for there to have been a transfer of business is a connection between Coffee Galleria and Coffee Management pursuant to s.311(d).

[20] According to s. 311(d) of the Act, a connection exists between an old and new employer when any one of the following four conditions are satisfied:

1. There is an arrangement between the old and the new employer for the new employer to use some of the assets used by the old employer to carry out the work; 12 or
2. The old employer outsources the work to the new employer and the work is now being done by the employee for the new employer; 13 or
3. The new employer had outsourced the work to the old employer but ceases to do and the work is now being done by the employee for the new employer; 14 or
4. The new employer is an associated entity of the old employer when the employee becomes employed by new employer. 15

[21] As I have already said I am satisfied that the work being done by Mr Cincotta for Coffee Galleria and Coffee Management was the same or substantially the same and it was done in the same location. It follows that Coffee Management was using assets, such as the warehouse used previously by Coffee Galleria. Coffee Management did not give evidence, however it is reasonable to infer from the uncontested facts, of the existence of Coffee Galleria, the existence of Coffee Management and the existence of the same place of business, that an arrangement existed between them for the use of these assets. The second and third condition do not appear to be relevant and the fourth depends upon the two being associated entities, which I have addressed above.

[22] I am satisfied that a transfer of business occurred between Coffee Galleria and Coffee Management because all the required conditions set out in s.311(1)(a) to (c) are satisfied along with at least one of the conditions required by s.311(d), that is, s.311(3).

Was Mr Cincotta’s service with Coffee Galleria as a casual employee?

[23] Notwithstanding my findings above, Mr Cincotta’s service with Coffee Galleria cannot be counted if he was as a casual employee who did not meet the conditions contained in s.384 (2)(a) of the Act.

[24] Mr Laface contended that Mr Cincotta was a casual employee when he was employed by Coffee Galleria and he was not employed on a regular and systematic basis with a reasonable expectation of continuing employment on a regular and systematic basis. Accordingly his service could not count towards service with Coffee Management even if the other conditions above were met. Mr Cincotta contended that he was a full time employee. He gave evidence, which I accept, that he went to work every day except public holidays, from which I inferred that he meant every working day, being Monday to Friday. His pay slips support this evidence.

[25] The payslips that he was able to find, show hours of work for the period 26 June 2013 to 18 March 2014 as follows:

26/6/13 to 2/7/13 40.73

7/8/13 to 13/8/13 45.31

14/8/13 to 20/8/13 41.63

21/8/13 to 27/8/13 35.61

11/9/13 to 17/9/13 41.61

18/9/13 to 24/9/13 41.18

2/10/13 to 8/10/13 34.81

9/10/13 to 15/10/13 42.23

23/10/13 to 29/10/13 42.74

30/10/13 to 5/11/13 43.24

6/11/13 to 12/11/13 32.21

13/11/13 to 19/11/13 41.64

20/11/13 to 26/11/13 47.5

27/11/13 to 3/12/13 45.88

1/1/14 to 7/1/14 16

8/1/13 to 14/1/14 49.75

15/1/14 to 21/1/14 48.04

29/1/14 to 4/2/14 47.44

5/2/14 to 11/2/14 37.26

12/2/14 to 18/2/14 47.92

19/2/14 to 25/2/14 50.72

26/2/14 to 4/3/14 38.88

12/3/14 to 18/3/14 38.18

There was no evidence that Coffee Galleria employed Mr Cincotta as a casual employee let alone an irregular casual employee. Mr Laface put to Mr Cincotta in cross examination that the absence of sick leave and annual leave from his pay slips with Coffee Galleria revealed his casual status. I do not accept this. In any event if he was a casual employee he was clearly a casual employee who met the conditions contained in s.384(2)(a) of the Act and thus his service with Coffee Galleria counts towards the minimum employment period. He is also not excluded by way of s.384(2)(b) of the Act as it is agreed that he was not informed in writing by Coffee Management that his service with Coffee Galleria would not be recognised by Coffee Management.

Conclusion

[26] I find that Mr Cincotta’s service with Coffee Galleria does count as service with Coffee Management and being from at least 26 June 2013 to 14 January 2015 exceeds the minimum employment period for a small business employer of one year.

[27] Accordingly I find that Mr Cincotta is a person who is protected from unfair dismissal. I order that the jurisdictional objection by Coffee Management and Solutions Pty Ltd is dismissed. Mr Cincotta’s application will be listed before me for a directions conference as soon as possible to program the matter for arbitration.

DEPUTY PRESIDENT

Appearances:

M. Maiorana, Maiorana Lawyers, for the Applicant

S. Laface, AJL Legal, for the Respondent

Hearing details:

2015

Sydney:

13 July.

 1 Section 382(a) Fair Work Act 2009.

 2 Section 383 Fair Work Act 2009.

 3 Section 23 Fair Work Act 2009.

 4 Section 384(1) Fair Work Act 2009.

 5 Section 22(1) Fair Work Act 2009.

 6 Section 384(2)(a) Fair Work Act 2009.

 7 Section 22(5) Fair Work Act 2009.

 8 Section 22(7) Fair Work Act 2009.

 9 Section 50AAA Corporations Act 2001

 10 Section 311(1) Fair Work Act 2009.

 11   Mr Cincotta says he commenced on or around 21 June 2013 and his payslip, relied upon by Coffee Management, cites 26 June 2013.

 12 Section 311(3) Fair Work Act 2009.

 13 Section 311(4) Fair Work Act 2009.

 14 Section 311(5) Fair Work Act 2009.

 15 Section 311(6) Fair Work Act 2009.

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