Mrs Alison Garner v Redmako Rto T/A Red Aussie

[2015] FWC 8589

[2015] FWC 8589

The attached document replaces the document previously issued with the above code on 11 December 2015.

1. To correct the applicant’s date of termination at paragraph 6.

David Cambridge

Associate to Commissioner Johns

Dated 16 December 2015.

[2015] FWC 8589

FAIR WORK COMMISSION

DECISION

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

Mrs Alison Garner
v
Redmako RTO T/A Red Aussie
(U2015/9203)

COMMISSIONER JOHNS MELBOURNE, 11 DECEMBER 2015

Application for Relief of Unfair Dismissal – small business employer – associated entity – company incorporated in a foreign jurisdiction.

Introduction

[1] On 9 July 2015, an application pursuant to s.394 of the Fair Work Act 2009 (FW Act) for a remedy for unfair dismissal was lodged by Alison Garner (Applicant). The respondent is Red Aussie Support Services Pty Ltd (trading as Redmako Learning) (Employer/Respondent).
[2] On 3 August 2015 the respondent filed a response to the unfair dismissal in which it objected the Fair Work Commission (Commission) exercising jurisdiction in relation to the matter on the basis that, it submitted, the applicant had not met the minimum employment period required in circumstances where, the respondent further submitted, it was a small business employer.
[3] Noting the respondent’s jurisdictional objection it was necessary to list the matter for a jurisdictional hearing. This occurred on 12 October 2015.
[4] The applicant was represented by Mr D Peverill from United Voice and gave evidence on her own behalf.
[5] The respondent was represented by two of its employees Mr K Carrigan and Mr J Teufel, both of whom gave evidence on behalf of the respondent.

Background

[6] The following matters where either common ground between the parties or otherwise not contested:

a) The applicant commenced working for the respondent on 14 July 2014.

b) The applicant’s employment with the respondent ended on 7 July 2015.

c) The period that the applicant worked for the respondent was less than 12 months.

d) The relevant award is the Educational Services (Post-Secondary Education) Award 2010.

e) The applicant was paid $65,000 per annum.

[1] The applicant submits she was unfairly dismissed and seeks an Order that she be reinstated or otherwise compensated.

Protection from Unfair Dismissal

[2] An order for reinstatement or compensation may only be issued where the Commission is satisfied the applicant was protected from unfair dismissal at the time of the dismissal.
[3] Section 382 sets out the circumstances that must exist for the applicant to be protected from unfair dismissal:

“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; 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.

[4] In the present matter the dispute is about whether the applicant has completed a period of employment with the respondent of at least the minimum employment period. The respondent says that period is 12 months because it is a small business employer.
[5] The applicant disputes that the respondent is a small business and says the minimum employment period is 6 months (which she served in excess of).

Is the respondent a Small Business?

[6] To be satisfied that a minimum employment period of 12 months applies to the applicant the respondent must be a “small business employer” for the purposes of the Act, which is defined at s.23:

“23 Meaning of small business employer
(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.
(2) For the purpose of calculating the number of employees employed by the employer at a particular time:

(a) subject to paragraph (b), all employees employed by the employer at that time are to be counted; and
(b) a casual employee is not to be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis.

(3) For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.
(4) To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee’s employment, the employees that are to be counted include (subject to paragraph (2)(b)):

(a) the employee who is being dismissed or whose employment is being terminated; and
(b) any other employee of the employer who is also being dismissed or whose employment is also being terminated.”

[7] The respondent submits that immediately before the dismissal they were a small business employer within the meaning of s.23 of the Act. In correspondence to the Commission it said it employed 13 people (including the applicant).
[8] The respondent was a small business employer if immediately before the dismissal it and any associated entities, employed fewer than 15 employees including casuals employed on a regular and systematic basis and the applicant.
[9] The respondent submits they were a small business employer at the relevant time (i.e. on 7 July 2015) and it provided the following evidence to establish that fact:

a) A payroll employee summary for the period 1 June 2015 to 30 June 2015 (Exhibit “R1”) containing the names of 15 employees;

b) A payroll employee summary for the period 1 July 2015 to 31 July 2015 (Exhibit “R2”) containing the names of 11 employees.

[1] The differences between Exhibit “R1” and Exhibit “R2” were that Exhibit “R1”:

a) contained the name of an employee who was not employed from 1 July; and
b) failed to contain the names of 3 employees which continued to be employed but were not paid in July 2015 (because of salary sacrifice reasons or because they are commissions only staff). 1

[1] The applicant submits the respondent was not a small business employer at the time of dismissal. The applicant says there were 47 employees and produced an organisational chart (Exhibit “A1”), a list of different divisions of the respondent’s business (Exhibit “A2”), a staff list as at 10 October 2015 (Exhibit “A3”). The applicant had previously provided to the commission a list of employees she said should be counted for the purposes of determining whether the respondent was a small business (Exhibit “A4”). The applicant, understandably, formed the view that all of the people listed on Exhibit “A4” were employees of the respondent because the majority of them had an email address ending in @redmako.com.au. Others had email addresses ending in @aussiebrokers.com.au.
[2] Mr Carrigan explained that employees in Australia including those with the Aussie Brokers email address were actually employed by called Red Aussie Support Services Pty Ltd (i.e. the respondent). 2 He further explained that the reason for the difference in the lists provided by the respondent (Exhibit “R2” with 13 employees) and the list provided by the applicant (“Exhibit “A4” with 47 employees) is that a vast majority of the employees on the applicant’s list are in fact employed in the Philippines by a company there called People Partners BPO. The applicant accepted that the majority of the employees are based in the Philippines.3
[3] Further the applicant’s list also contained non-employees namely the directors of the respondent, one of the director’s wives, and an external accountant. 4
[4] However, Mr Carrigan conceded that three employees on the applicant’s list ought to be included on Exhibit “R2”.
[5] As a consequence of the evidence given by Mr Carrigan the respondent conceded that immediately before the dismissal of the applicant, it employed 14 people. I am satisfied on the evidence before me that the respondent, itself, only directly employed 14 people.

People Partners BPO

[6] However, what became apparent during the course of the jurisdictional hearing was that the issue to be resolved was whether the employees of People Partners BPO could be included in the count of employees for the purposes of determining whether the respondent was a small business employer. That question turned on whether People Partners BPO was an associated entity of the respondent.
[7] In his evidence Mr Teufel conceded that one of the directors of the respondent (Reuben Brennan) was also a director of People Partners BPO. Mr Teufel explained that the Filipino company was registered locally in the Philippines and had three Filipino directors. He said he believed the fifth director of People Partners BPO was Anthony Rice, also a director of the respondent (although he said he was not certain). 5
[8] Noting the importance of the issue the respondent was given leave to file additional material about the relationship between it and People Partners BPO. On 15 October 2015 the respondent provided the Commission with a copy of the Master Services Agreement between it and People Partners BPO. In doing so the respondent further submitted that none of the Filipino employees of People Partners BPO are employees of it.
[9] The Master Services Agreement clearly establishes that People Partners BPO is a Philippines based corporation that provides off shoring and outsourcing services to the respondent. Further, pursuant to clause 5.2 of the Master Services Agreement it is an express term that People Partners BPO act as an independent contractor of the respondent and the employees of People Partners BPO “in no case shall they be deemed to be employees of the [respondent].”
[10] There is no doubt that the Filipino employees of People Partners BPO are not employees of Red Aussie Support Services Pty Limited. However, that is not the question that needs to be determined. Rather the question is whether People Partners BPO is an associated entity of Red Aussie Support Services Pty Limited. If it is an associated entity then it is permissible to count the employees of People Partners BPO that are purposes of determining whether the respondent is a small business employer (even though they are not employees of the respondent).
What is an associated entity?
[11] An associated entity is defined in s.50AAA of the Corporations Act 2001 (Cth) (Corporations Act). An entity (the associate) may be an associated entity of another entity (the principal) in the following circumstances:

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

[1] The word ‘control’ is defined in s.50AA of the Corporations Act. One entity controls another when the first entity can make decisions that determine the financial and operating policies of the second entity.
[2] The Corporations Act does not expressly address whether a company that is incorporated in a foreign jurisdiction falls within the definition of an associated entity. The FW Act is silent on the point. However, there are a number of decisions of the Australian Industrial Relations Commission which have confirmed that foreign companies can fall within the definition of related body corporate for the purposes of the former “100 employees or fewer” exclusion that applied under the former legislation. 6 Those decisions remain apposite today.
[3] In answer to the additional material provided by the respondent the applicant made further submissions which highlighted the common directorships between the respondent and People Partners BPO.
[4] Noting the common directorships and the evidence of the relationship between People Partners BPO and the respondent it seems reasonable to find that the operations, resources or affairs of People Partners BPO are material to the respondent and vice versa. Consequently, the Commission, as presently constituted, finds that People Partners BPO is an associated entity of the respondent. Therefore the employees of People Partners BPO are to be included in the count of employees for determining whether the respondent is a small business employer.
Conclusion
[5] The Commission, as presently constituted, is satisfied that immediately before the dismissal, the respondent and its associated entity employed more than 15 employees.
[6] Consequently, the Commission, as presently constituted, finds the respondent was not a small business employer within the meaning of s.23 of the Act immediately before the dismissal.
[7] By reason of the respondent not being a small business employer and the applicant having worked for the respondent for more than 6 months, the Commission, as presently constituted, is satisfied that the applicant was protected from unfair dismissal.
[8] The applicant’s application for an unfair dismissal remedy will now be referred back to the Unfair Dismissals Team for further programming including listing for conciliation in the normal manner.

COMMISSIONER

Appearances:

Mr D Peverill from United Voice for the applicant

Mr K Carrigan and Mr J Teufel for the respondent

Hearing Details:

Brisbane

12 October 2015

Final Submissions:

Respondent, 15 October 2015

Applicant, 26 October 2015

 1   Transcript PN87-102.

 2   Transcript PN24.

 3   Transcript PN195.

 4   Transcript PN28-47.

 5   Transcript PN182.

 6   See Baldacchino & Ors v Triangle Cables (Aust) Pty Ltd (2006) 59 AILR 100-477(18); Wilkonson v Hospitality Marketing Concepts Pty Ltd [2006] AIRC 494; and Espie v Studio 301 Pty Ltd [2009] AIRC 655.

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