Mr Steven Brownhalls v BB161013 Pty Ltd

[2020] FWC 5807

[2020] FWC 5807

FAIR WORK COMMISSION

DECISION

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

Mr Steven Brownhalls
v
BB161013 Pty Ltd
(U2020/10136)

COMMISSIONER HUNT BRISBANE, 9 NOVEMBER 2020

Application for an unfair dismissal remedy – whether applicant meets minimum employment period – whether new employer can appoint different corporate entity to advise that a period of service with an old employer will not be recognised by new employer – s.384(2)(iii) not satisfied – respondent’s jurisdictional objection dismissed.

Application

[1] On 24 July 2020, Mr Steven Neale Brownhalls made an application pursuant to s.394 of the Fair Work Act 2009 (the Act) alleging he was dismissed from BB161013 Pty Ltd (the Respondent) and the dismissal was harsh, unjust or unreasonable.

[2] In his Form F2 Application, Mr Brownhalls stated that:

•  He had been employed by Bernard Petroleum Pty Ltd (Bernard Petroleum) as a diesel mechanic since 16 October 2018;

•  Bernard Petroleum entered into a contract of sale for the sale of its business in or around August 2019 to BB161013 Pty Ltd, the Respondent;

•  The sale transaction settled on 12 June 2020;

•  He is a transferring employee given that prior to commencing employment with the Respondent, the Respondent did not advise him in writing that a period of service with Bernard Petroleum would not be recognised as is required by s.384(2)(b) of the Act;

•  On 15 July 2020, he was advised by the Respondent’s manager, Mr Ben Bernard, that he was dismissed from employment; and

•  He has requested the Respondent provide reasons for his dismissal. Those reasons have not been provided.

[3] In the Respondent’s Form F3 Employer Response, it raised a jurisdictional objection to the application that Mr Brownhalls has not met the minimum employment period to be protected from unfair dismissal. It stated:

“We have taken over the business on 12th June 2020. After the takeover, he worked with us only one week. The applicant worked was comments to year “Full-time Employment position with his previous employer. Hence, he denied the offer of Casual employment.

However, our manager tried to give him more shifts. Unfortunately, he was not happy with that. He used the foul and unfair language during the duty hours, which was not right and appropriate in the working environment. Our other staff also was not happy with his behaviour.

As the applicant didn’t agree the “Casual Employment Offer”, we have given him a two weeks verbal notice as per his contract.

Moreover, we also paid for him one-week extra wages without working any single hours.” [original text]

[4] On allocation to my chambers I issued directions for both parties to file materials relevant to the Respondent’s jurisdictional objection. After receipt of the materials I advised the parties that I was of the mind to determine the jurisdictional matter on the papers, without a hearing, inviting the parties to advise whether either opposed such course of action. I did not receive any correspondence from either party opposing determination of the matter on the papers. Accordingly, I have decided to determine the jurisdictional objection without a hearing.

Evidence of the Respondent

Statement of Ben Bernard

[5] Mr Bernard made a witness statement in these proceedings. Mr Bernard is a Director of Bernard Petroleum (the old employer). On the sale of the business, he continued on as an employee of BB161013 (the new employer).

[6] It is Mr Bernard’s evidence that while the sale of the business had been planned to occur on 12 June 2020, the old employer continued to employ employees, including Mr Brownhalls until 21 June 2020. Employment with the new employer then commenced on 22 June 2020.

[7] It is Mr Bernard’s evidence that the Respondent nominated Bernard Petroleum as the agent for the Respondent to advise terminated employees who had been offered employment with the Respondent that the Respondent would not recognise prior service with Bernard Petroleum. A letter dated 19 June 2020 was annexed to the Respondent’s submissions, and reads as below:

“Dear Steven

Transfer of business

We wish to advise that Bernard Petroleum Pty Ltd (the Company) is currently in the process of transferring the business to BB161013 Pty Ltd.

As discussed with you on 16 March 2020 this transfer was expected to take place on 12 June 2020. As part of the transfer, all operations and the work currently performed by the Company will now be performed by BB161013 Pty Ltd.

As such, from Monday 22 June 2020, the Company will no longer require employees to carry out the work.

Redeployment

As discussed with you BB161013 Pty Ltd will be offering employment to all of the Company’s existing employees, on terms and conditions that are substantially the same as their existing terms of employment.

However, BB161013 Pty Ltd has indicated that is not intending to recognise the employees’ previous service with the Company. Therefore, if you choose to accept the offer of employment, the Company will pay any accrued annual leave and entitlements on termination of your employment with the Company

Next Steps

The Company will be paying final entitlements to employees by 30 June 2020.

In the meantime, if you wish to discuss this further, please contact Ben Bernard.

Yours sincerely

Ben Bernard
Director” [original text and emphasis]

[8] Bernard Petroleum paid to Mr Brownhalls his termination payments on 30 June 2020.

[9] Mr Bernard stated that on 15 July 2020, a meeting took place between Mr Bernard, Mr Warren Dyke and Mr Brownhalls to notify Mr Brownhalls of his dismissal on the grounds of his refusal to work under the Respondent’s (the new employer’s) direction to a point where the relationship was not workable. Mr Bernard stated that Mr Brownhalls refused to perform repairs, or selectively performed repairs, disregarded other repairs required, and refused to perform simple emergency or time-sensitive repairs and breakdowns. The Respondent incurred large labour costs paying a contractor to complete the tasks.

[10] Mr Bernard provided an example of the above conduct; a vehicle needed to be deployed the next day and Mr Brownhalls refused to complete the repairs, despite knowing how urgent the repairs were. A contractor was urgently required to complete the repair.

[11] It was further stated that Mr Brownhalls refused to complete the tasks expected of him, being idle while the contractor was performing the work that should have been performed by Mr Brownhalls.

[12] At the meeting of 15 July 2020, after being informed of his dismissal, Mr Bernard’s evidence is that Mr Brownhalls responded, “Y’all can go fuck yourselves” before storming out of the room. He also heard him say, “I’ll be back tomorrow but don’t expect me to do any fucking work.” Mr Brownhalls returned to work the following day, but no work was completed.

Statement of Narayan Ghosh

[13] Mr Narayan Ghosh made a witness statement in these proceedings. It is not clear if Mr Narayan Ghosh is a director of BB161013 Pty Ltd (the new employer). It is noted that the Form F3 Employer Response nominated Mr Prabir Kumar Ghosh as a Director.

[14] Mr Narayan Ghosh stated that he authorised Bernard Petroleum (the old employer), on behalf of BB161013 Pty Ltd (the new employer) to act as an agent for BB161013 Pty Ltd and to advise terminated employees of Bernard Petroleum that if employees did choose to accept employment with BB161013 Pty Ltd, their prior service would not be recognised by BB161013 Pty Ltd.

[15] Mr Ghosh stated that Mr Brownhalls approached him on 15 July 2020 following a meeting with Mr Bernard and Mr Dyke. Mr Brownhalls informed him that he had been dismissed and asserted that he was entitled to one week of termination pay.

[16] Mr Ghosh received an email from Mr Brownhalls on 16 July 2020, requesting one week’s payment in lieu of notice, and details for the reason for termination. Mr Ghosh understood that Mr Brownhalls was paid his one weeks’ notice payment on 24 July 2020. The email sent by Mr Brownhalls was not read by Mr Ghosh until late in July 2020 as it had been sent to an email account that was not regularly checked.

Statement of Warren Dyke

[17] Mr Dyke made a witness statement in these proceedings. He stated that he was present at the meeting between Mr Brownhalls and Mr Bernard on 15 July 2020. It is Mr Dyke’s evidence that during this meeting after Mr Brownhalls was informed of his dismissal and the reasons for the dismissal, he stormed out of the meeting in the way Mr Bernard stated in his statement as above at [12].

Submissions of the Respondent

[18] With respect to the period of Mr Brownhalls’ service, the Respondent submitted that Bernard Petroleum sold the business to BB161013 Pty Ltd under a contract of sale which settled on 12 June 2020. It was also submitted that Bernard Petroleum and BB161013 Pty Ltd are not associated entitiesfor the purposes of s.384(2) to the Act.

[19] The Respondent submitted that Bernard Petroleum terminated the employment of Mr Brownhalls on 21 June 2020, two weeks after the settlement of the sale. Termination payments were made shortly thereafter.

[20] It was submitted that the Respondent appointed Bernard Petroleum as agent to notify Mr Brownhalls that the period of service with Bernard Petroleum would not be recognised by the Respondent. It was submitted that on 19 June 2020, the Respondent notified Mr Brownhalls in writing before the new employment started that the period of service with Bernard Petroleum would not be recognised with the Respondent.

[21] The Respondent considers that the appointment of Bernard Petroleum as agent of the Respondent and notification by the agent to Mr Brownhalls satisfies the requirements of s.384 to the Act; such that the period of service with Bernard Petroleum does not count towards Mr Brownhalls’ period of service with the Respondent.

[22] With respect to the termination, the Respondent noted that the minimum employment period applicable is six months under s.383 to the Act, as the Respondent is not a small business employer. It was submitted that by Mr Brownhalls’ own admission, the parties entered into an employment relationship governed also by the Vehicle Repair, Services and Retail Award 2020. It was further submitted that Schedule Item 4 to the unsigned agreement, being the commencement date with the Respondent should be read as 22 June 2020 and not 12 June 2020, as Mr Brownhalls was employed by Bernard Petroleum until 21 June 2020, and was paid by Bernard Petroleum for wages up to 21 June 2020 by Bernard Petroleum.

[23] The Respondent noted that clause 2 to the agreement cites:

“2. PROBATION

Your employment is probationary for the first three months of employment with the Employer.

During the probationary. Period, your employment may be terminated with one week’s notice by either party, or payment in lieu of such notice…” [original emphasis]

[24] The Respondent submitted in summary:

•  Mr Brownhalls is not protected from unfair dismissal in these circumstances pursuant to ss.382 to 384 of the Act, because he does not have a period of continuous service with the Respondent of greater than six months in respect of the second employment relationship;

•  The dismissal is not harsh, unjust or unreasonable in the circumstances of Mr Brownhalls’ continuing refusal to perform repairs at the Respondent’s request to warrant operation of s.385 to the Act;

•  Even if the period of service with Bernard Petroleum counted towards service with the Respondent, Mr Brownhalls was paid in compliance with the agreement and clause 38.1 to the Vehicle Repair, Services and Retail Award 2020; and

•  The application must be dismissed as it lacks jurisdiction.

Evidence of the Applicant

Statement of Steven Brownhalls

[25] Mr Brownhalls made two witness statements in these proceedings. He stated that he commenced employment with Bernard Petroleum on 16 October 2018. The business within which he was employed was transferred to BB161013 Pty Ltd on 12 June 2020. He understands his employment with the Respondent commenced on 12 June 2020.

[26] Mr Brownhalls stated that prior to commencing employment with the Respondent he was not advised by it that his period of service with Bernard Petroleum would not be recognised by the Respondent. On 1 July 2020, he was provided with a new employment contract which stated that his employment commencement date was 12 June 2020. He stated his employment with Bernard Petroleum was terminated on the sale of the business on 12 June 2020.

[27] Mr Brownhalls considers that his employment with Bernard Petroleum ended on 12 June 2020 and he was immediately employed by the Respondent. His evidence is that the work he performed for the Respondent was substantially the same as the work he performed for Bernard Petroleum.

[28] He stated that he understands Bernard Petroleum’s plant and equipment was sold to the Respondent in the sale. He also stated that the Respondent’s business operates from the same premises as Bernard Petroleum.

[29] On 15 July 2020, Mr Brownhalls was informed by Mr Bernard that his employment with the Respondent was terminated. It is his evidence that Mr Bernard advised him that the Respondent was renting the shed out, and therefore his services would no longer be required within two days. He responded to the effect, “Two days’ notice is pretty shit.” It is his evidence that Mr Bernard responded that he was lucky to get that, and it was being provided as a courtesy. Mr Bernard informed him that Mr Ghosh would provide him with more information as to why he was being dismissed.

[30] Mr Brownhalls denied that he had refused to work on particular jobs or breakdowns.

Statement of Leanne Harris

[31] Ms Leanne Harris made a witness statement in these proceedings. She stated that she was the Financial Controller for Bernard Petroleum for four years.

[32] Ms Harris stated that the Respondent did not have its payroll system in place at the time that it took over the business on 12 June 2020. It was Ms Harris’ evidence that Mr Bernard instructed her, on behalf of Bernard Petroleum to attend to payment of staff wages on 12 June 2020 and 19 June 2020. Ms Harris was directed to issue invoices to the Respondent for the gross wages and superannuation that was paid to the individuals, and Bernard Petroleum would be reimbursed for those wages as those employees were now in the employ of the Respondent.

Submissions of the Applicant

[33] Mr Brownhalls submitted that s.382 of the Act provides, inter alia, that a person is protected from unfair dismissal if they have completed a minimum employment period with their employer. Section 383 provides that, if the employer is a small business employer, the minimum period is one year, otherwise it is six months.

[34] It was submitted that if Mr Brownhalls’ period of employment with Bernard Petroleum is counted as continuous service with his employment with the new employer, then he has completed the minimum employment period regardless of whether it is six months or one year.

[35] Mr Brownhalls submitted that the matters set out in ss.311(1)(a), (b), (c), (d) and 311(3) have been satisfied as:

•  His employment with Bernard Petroleum was terminated on the sale of the business on 12 June 2020, satisfying s.311(1)(a) of the Act;

•  He continued employment with the new owner immediately following his termination with the old employer, satisfying s.311(1)(b) of the Act;

•  The work he performed for the new employer was substantially the same as the work he performed for the old employer, satisfying s.311(1)(c) of the Act;

•  The older employer sold the business including plant and equipment to the new employer and operates on the same premises. As he was employed at these premises with the same plant and equipment before and after the sale of the business ss.311(1)(d) and 311(3) of the Act are satisfied.

[36] It was submitted that as Mr Brownhalls was not advised in writing by the new employer prior to commencing employment with the new employer that his prior service with the old employer would not be recognised, then by virtue of sub-s.384(2)(b)(ii) of the Act his period of employment with the old employer is not excluded and must be recognised as a period of employment relevant to the minimum employment period that must be completed after which an employee is protected from unfair dismissal. It was further submitted that his period of employment for the purposes of sub-s.382(a) of the Act included the period of employment with Bernard Petroleum which commenced in October 2018. At the time of his dismissal the period of employment exceeded the minimum period as prescribed by s.383 of the Act.

[37] Mr Brownhalls rejects the Respondent’s assertions that the old employer terminated his employment two weeks after settlement, on 22 June 2020. He submitted that his employment with the old employer ceased on 12 June 2020. The employment contract provided by the new owner stated the commencement date as 12 June 2020. Mr Brownhalls noted Ms Harris’ evidence that the old employer paid wages on behalf of the new employer to Mr Brownhalls on 19 June 2020 and 26 June 2020.

[38] It was submitted that as and from 12 June 2020, Mr Brownhalls could not have been employed by the old employer as the old employer had sold its business, and the new employer took over operation of that business on 12 June 2020. It was submitted that notice given by the old employer that the new employer would not be recognising his service cannot have been given in accordance with the requirements of the Act, namely, because it had been given after Mr Brownhalls commenced employment with the new employer. Further, it was submitted that it had not been given by the new employer, the Respondent.

[39] Mr Brownhalls noted that the Respondent asserts that notice was given with its authority and it appointed the old employer as the agent to give that notice. It was submitted that the Act does not permit another person authorised by the new employer to give notice as required by s.384 of the Act. On the face of the letter of 19 June 2020 provided by the old employer, the letter is not purported to be given on behalf of the new employer and it was submitted that it does not satisfy the requirements of the Act.

[40] Mr Brownhalls denied the Respondent’s version given for his dismissal and stated that a prima facie cause of unfair dismissal exists.

Relevant legislation

Initial matters

[41] Under section 396 of the Act, the Commission is obliged to decide the following matters 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.

When is a person protected from unfair dismissal?

[42] Section 382 of the Act provides that a person is protected from unfair dismissal if, at the time of being dismissed:

(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.

Minimum employment period

[43] Section 383 of the Act defines the meaning of “minimum employment period”. Section 384 relevantly provides:

“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.”

[44] If the minimum employment period has not been met the application must be dismissed.

Transfer of business

[45] Section 311 of the Act sets out when a transfer of business occurs, and states:

“311 When does a transfer of business occur

(1) There is a transfer of business from an employer (the old employer ) to another employer (the new employer ) if the following requirements are satisfied:

(a) the employment of an employee of the old employer has terminated;

(b) within 3 months after the termination, the employee becomes employed by the new employer;

(c) the work (the transferring work ) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;

(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).

Meaning of transferring employee

(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.

Transfer of assets from old employer to new employer

(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:

(a) the old employer or an associated entity of the old employer; and

(b) the new employer or an associated entity of the new employer;

the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):

(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and

(d) that relate to, or are used in connection with, the transferring work.

Old employer outsources work to new employer

(4) There is a connection between the old employer and the new employer if the transferring work is performed by one or more transferring employees, as employees of the new employer, because the old employer, or an associated entity of the old employer, has outsourced the transferring work to the new employer or an associated entity of the new employer.

New employer ceases to outsource work to old employer

(5) There is a connection between the old employer and the new employer if:

(a) the transferring work had been performed by one or more transferring employees, as employees of the old employer, because the new employer, or an associated entity of the new employer, had outsourced the transferring work to the old employer or an associated entity of the old employer; and

(b) the transferring work is performed by those transferring employees, as employees of the new employer, because the new employer, or the associated entity of the new employer, has ceased to outsource the work to the old employer or the associated entity of the old employer.

New employer is associated entity of old employer

(6) There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employed by the new employer.”

Consideration

[46] Pursuant to s.396(b) of the Act, I must first determine whether Mr Brownhalls was a person protected from unfair dismissal. This decision does that, and I have not traversed any merit arguments between the parties.

[47] The application was made within time, noting it is uncontested that 15 July 2020 is considered the date Mr Brownhalls’ employment was terminated at the initiative of the Respondent.

[48] There are no Small Business Fair Dismissal Code considerations necessary, nor is it case of genuine redundancy.

[49] It is not contested that Mr Brownhalls earned less than the applicable high-income threshold.

[50] The initial question, therefore, is to determine if Mr Brownhalls served the minimum employment period.

Was there a transfer of business?

[51] Accepting Mr Brownhalls’ uncontested submissions above at [35] relevant to the transfer of business, I am satisfied that ss.311(1)(a) – (c) have been met, that being:

(a) the employment of an employee of the old employer has terminated;

(b) within 3 months after the termination, the employee becomes employed by the new employer;

(c) the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer.

[52] It is necessary, however, for a transfer of business to be satisfied for any one of ss.311(3) – (6) to have been met.

[53] I note Mr Bronwhalls’ submissions above at [35] that the old employer sold the business including plant and equipment to the new employer and operates on the same premises. I am satisfied that all of the requirements at s.311(3) are met as there is an arrangement between the old employer and the new employer for the new employer to have beneficial use of some or all of the assets that the old employer used in the performance of the work.

[54] Being satisfied that s.311(3) is met and having determined that s.311(1)(a)-(c) have been met, I too am satisfied that s.311(1)(d) is met. Accordingly, I determine that there has been a transfer of business.

Calculation of length of service

[55] In determining Mr Brownhalls’ length of service, there are two questions to assist in the determination:

(a) When did the employment with the Respondent commence; and

(b) Did the letter by the old employer, purportedly as agent for the new employer satisfy the requirements in s.384(2)(b)(iii).

When did the employment with the Respondent commence?

[56] I understand the Respondent was not in a position to employ employees on 12 June 2020 when the sale of the business occurred. It was not ready to do so for a further two weeks. In that time, the evidence demonstrates that the old employer paid to employees the wages owed to them, made payments to their respective superannuation funds, and I expect, remitted taxation to the Australian Taxation Office.

[57] Whilst Mr Brownhalls was performing work from 12 June 2020 to 21 June 2020 for the benefit of the Respondent, he did so whilst continuing to be employed by the old employer. It was the old employer who continued to pay wages, deduct taxation and make superannuation contributions. It agreed to commercially charge the Respondent for such payments, as it is entitled to do so.

[58] Despite any references within the unsigned employment agreement to employment commencing on 12 June 2020 with the Respondent, or any oral representations, I am satisfied that employment with the Respondent did not commence until 22 June 2020. Accordingly, when the letter dated 19 June 2020 was issued to Mr Brownhalls, it was done so before the new employment started, satisfying part of s.384(2)(b)(iii).

Did the letter by the old employer, purportedly as agent for the new employer satisfy the requirements of s.384(2)(b)(iii)

[59] Section 384(2)(b)(iii) states that it is the new employer who is required to inform the employee, in this instance Mr Brownhalls, in writing that a period of service with the old employer would not be recognised.

[60] At no time did the new employer, the Respondent do so. It now seeks the Commission to accept that the old employer was acting with its authority when it did so, purportedly on its behalf.

[61] Whether authority was given by the Respondent to the old employer to make a representation to Mr Brownhalls is not, I consider, a determining factor. I conclude that the Act requires strict compliance for the new employer to communicate to the employee its position. The Act does not provide for an alternative, that being “on behalf of”; it states what the new employer is required to do.

[62] In my view, the positive obligation on the new employer cannot be delegated to a different corporate entity.

[63] I cannot be satisfied that s.384(2)(b)(iii) has been met. Section 384(2) requires all conditions to have been met before service with the old employer does not count towards the employee’s period of employment with the new employer.

[64] I am therefore satisfied that, at the time of dismissal, Mr Brownhalls was an employee who has completed a period of employment with the Respondent of at least the minimum employment period.

Conclusion

[65] I determine that Mr Brownhalls was employed by the Respondent for a period of more than six months, and therefore has completed the minimum period of employment pursuant to s.383(a) of the Act.

[66] For that reason, I am satisfied that Mr Brownhalls was, pursuant to s.382 of the Act, a person protected from unfair dismissal. The Respondent’s threshold jurisdictional objection to the application is dismissed.

[67] Accordingly, the application is to proceed before the Commission.

COMMISSIONER

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