Ms Catherine McLennan v Shade Solutions Australia (Vic) Pty Ltd
[2022] FWC 1116
•11 MAY 2022
| [2022] FWC 1116 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Ms Catherine McLennan
v
Shade Solutions Australia (Vic) Pty Ltd
(U2021/11816)
| COMMISSIONER YILMAZ | MELBOURNE, 11 MAY 2022 |
Application for unfair dismissal remedy – minimum employment period – whether restructure affected continuity – whether a small business – application dismissed.
On 17 December 2021, Ms Catherine McLennan lodged an unfair dismissal application under s.394 of the Fair Work Act 2009 (the Act). Shade Solutions Australia (Vic) Pty Ltd (Shade Solutions) objected to the application stating that Ms McLennan was not protected by the unfair dismissal provisions because she was had not completed the minimum employment period of twelve months and that it was a small business.
The parties filed written submissions and a hearing was held on 3 May and 10 May 2022.
Ms McLennan gave witness evidence and Mr Andrew Valk, Manager for the Respondent gave evidence.
The Applicant was granted leave for legal representation.
Background
Ms McLennan was employed by Shade Solutions Australia Pty Ltd on 23 March 2021 having been placed by a disability support agency. In around September 2021, the business was restructured and changed to Shade Solutions Australia (Vic) Pty Ltd.
Ms McLennan’s position of customer support officer did not change throughout her employment with both business entities, and she was dismissed on 30 November 2021.
Shade Solutions contend that Ms McLennan was employed for less than 6 months and states that the restructure of the business occurred on 1 September 2021 and therefore Ms McLennan’s employment commences from that date. Shade Solutions also contend that they are a small employer that employed 11 employees at the time of Ms McLennan’s dismissal.
Ms McLennan contends that Shade Solutions employs some 20 employees therefore it is not a small business, and her commencement date of 23 March 2021 is relevant to the minimum 6-month employment period required to enliven the unfair dismissal protections.
Submissions of the Respondent
Shade Solutions submits that Ms McLennan commenced on 1 September 2021 with the Respondent and was dismissed on 30 November 2021.
Shade Solutions tendered in evidence a copy of the electronic payroll record which lists all current employees and Mr Valk gave sworn evidence that there were 11 employees at the time of Ms McLennan’s dismissal. I observe the names provided in the statement from Mr Valk are consistent with the list provided from the payroll record.
Mr Valk gave evidence that Ms McLennan was required to work from home from 1 September until her dismissal in November 2021 due to Victorian Government imposed lockdown. He states that Ms McLennan was set up with a phone, laptop computer and modem for internet services to perform her duties including attending to incoming calls.
The parties are in dispute as to whether Ms McLennan performed her duties satisfactorily as Mr Valk states that some 217 calls went unanswered and phone records show that 163 hours are not accounted for. Shade Solutions further submit that there were other concerns regarding performance and conduct. The phone records were not provided but are unnecessary for the jurisdictional objection on the grounds of small business and minimum employment period.
Mr Valk identified three individuals from Ms McLennan’s list and gave evidence that those individuals were contractors and not employees. Copies of tax invoices from the three contractors were provided, each showing the individual ABN number of each. Mr Valk gave sworn evidence that the contractors did not receive payslips and are not employees. Mr Valk also gave evidence that Ms McLennan’s list of employees contained names of individuals he had no knowledge of.
Mr Valk described the change to the legal entity was due to a restructure. He gave evidence that employees were informed of the change, and all employees transferred to the new entity, including Ms McLennan. Mr Valk confirms there was no break in employment from engagement with the former and new entity. He also stated that employees were paid out their leave entitlements or had taken their leave before commencing with the new entity. In relation to Ms McLennan, Mr Valk states that she had exhausted her leave and therefore no leave was paid out to her prior to commencing with the new business.
Submissions of the Applicant
Ms McLennan disputes the business is a small business with less than 15 employees. She tendered a list of 20 names, some identified by only first name. Ms McLennan gave sworn evidence that the names in her list were of individuals she had met while employed by Shade Solutions.
Ms McLennan gave evidence that she was unaware of any restructure and she tendered payslips from March 2021 until her dismissal. She acknowledged that she may have misplaced some payslips, when asked about the missing weeks. Ms McLennan also confirmed that there was no interruption to her employment with the change of entity. When asked about the reference to the different legal entities in her payslips, she responded that she did not realise there had been a change.
In relation to the three contractors, Ms McLennan gave evidence that they drove vehicles with company livery and they regularly came into the office. Ms McLennan’s Representative submits that the invoices are not conclusive evidence that the three individuals are not employees.
In response to Mr Valk’s evidence that he paid additional sums as a loan into Ms McLennan’s bank account separate from the account her pay was paid into, she states that the payments were not loans but commissions that she earned. She also states that she had to provide reasons such as those cited in Mr Valk’s evidence to be paid her wages as they were not made in the time they should have been. Ms McLennan’s sworn evidence is disputed by Mr Valk as he distinguishes loans and payment of commissions which were paid monthly into her bank account where her wages were paid.
Relevant legislative provisions
The matter of jurisdiction must be established before an unfair dismissal can be considered on its merits. Shade Solutions object to the application on the grounds that Ms McLennan had not met the minimum employment period and that it was a small business.
Pursuant to s.396 of the Act, initial matters to be considered include:
· Whether the application was made within the statutory time frame;
· Whether the person is protected from unfair dismissal;
· Whether the dismissal was consistent with the Small Business Dismissal Code; and
· Whether the dismissal was a case of genuine redundancy.
The application was made within 21 days of the dismissal, there is no relevance to the argument that the dismissal is a genuine redundancy, however, should Ms McLennan be protected from unfair dismissal, then the matter of the Small Business Dismissal Code will be a relevant consideration.
Section 382 of the Act is relevant to the determination of whether Ms McLennan is protected from unfair dismissal. Relevantly, s.382 of the Act provides:
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.
The first limb of s.382 of the Act is whether the employee had completed the minimum employment period. Section 383 of the Act defines minimum employment period as follows:
Meaning of minimum employment period
The minimum employment period is:
(a) if the employer is not a small business employer-6 months ending at the earlier of the following times:
(i)the time when the person is given notice of the dismissal;
(ii)immediately before the dismissal; or
(b) if the employer is a small business employer-one year ending at that time.
Section 23 of the Act defines a small business as an employer that employs fewer than 15 employees. The Applicant is included in the count of employees at the time of the notice of dismissal or immediately before the dismissal.
Consideration
The application was made within the statutory time frame. However, for the purposes of s.382 of the Act, I am not satisfied that Ms McLennan had met the minimum employment period.
The evidence of number of employees tendered by Mr Valk confirms that there were 11 employees at the time of Ms McLennan’s dismissal. Mr Valk tendered evidence that three individuals were contractors and not employees, each with their own ABN on the invoice supplied to Shade Solutions for payment of commissions. The additional names unaccounted for in Ms McLennan’s list include the following:
1. Andrew (with no surname);
2. Ken (with no surname);
3. Andrew (with no surname), identified as ‘electrician’;
4. Mark Collins in sales;
5. Radolfo (with no surname);
6. Phil (with no surname), identified as ‘installer’; and
7. David Scott, electrician.
In Mr Valk’s payroll record there were three names that Ms McLennan did not include in her list. Further in relation to Ms McLennan’s list, Mr Valk confirmed that Gesmon in sales and his nephew Matthew were not employed at the time of the dismissal, and Radolfo was a consultant for a couple of weeks in early 2021. Mr Valk gave sworn evidence that he had never heard of a Ken in sales, Andrew an electrician, Mark Collins in sales, and David Scott an electrician. He did confirm that he had a David Scott as a consultant (one of the three identified) but not an employee. There was no other credible evidence to substantiate that there were 15 or more employees at the time of Ms McLennan’s dismissal.
As I have found that there were fewer than 15 employees, the minimum employment period is 12 months and Ms McLennan had not met the requirement.
It is not apparent if Ms McLennan as a transferring employee was engaged by a related entity or not. There was no evidence of a termination of employment at the time of transfer from the old to the new entity. Mr Valk gave evidence, that the transfer of employees was seamless from one day to the next. The work performed by Ms McLennan was the same and there was no evidence of business disruption in terms of trade, assets or the work performed. Based on the evidence, I am satisfied that Ms McLennan’s employment period is from March 2021 and not from 1 September 2021. Further I note that the payslips tendered by Ms McLennan which were not disputed show that even if the new entity was registered in August 2021 and established as the employing entity on 1 September, her payslips show the old legal entity as the employer until 1 October 2021.
The evidence is lacking in respect to whether Ms McLennan’s annual leave was exhausted or paid out as the payslips for the old employing entity makes no provision for annual leave. The absence of this evidence does not assist in determining particulars regarding the transfer of employees. An email from Wise Employment[1] of which the detail was not contested, confirms that Ms McLennan commenced employment on 23 March 2021.
I observe that Mr Valk was careful in explaining the changeover of legal entity. He described it as a restructure which may be no more than a change to the legal employing entity. On the other hand, it may have been a restructure involving the sale and transfer of a business. Both circumstances in my opinion do not affect the period of employment.
In the absence of credible evidence to dispute the period of employment commencing from 23 March 2021, Ms McLennan completed a period of some eight months, short of the required 12 months minimum employment period for protection against unfair dismissal.
Conclusion
I am satisfied that Ms McLennan commenced employment on 23 November 2021 and was dismissed on 30 November 2021. I am satisfied that the evidence is that Shade Solutions Australia (Vic) Pty Ltd, the employing entity at the time of dismissal employed fewer than 15 employees. Consequently, Ms McLennan had not met the 12 month minimum employment period required by the Act to enliven protections against unfair dismissal.
The matter is dismissed.
COMMISSIONER
Appearances:
P. Cott for the Applicant
A. Valk for the Respondent
Hearing details:
2022
Melbourne (By Video using Microsoft Teams)
3 May and 10 May
[1] Exhibit A1, witness statement of Catherine McLennan, annexure 33.
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