Ms Susanna Rossi v New Era Disability Services Incorporated

[2019] FWC 7785

[2019] FWC 7785

FAIR WORK COMMISSION

DECISION

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

Ms Susanna Rossi
v
New Era Disability Services Incorporated
(U2019/7084)

DEPUTY PRESIDENT BULL SYDNEY, 13 NOVEMBER 2019

Application for an unfair dismissal remedy – minimum employment period – whether transfer of business – Fair Work Act 2009 (Cth) ss.311, 383, 384 – no transfer of business – minimum employment period not completed – jurisdictional objection upheld – application dismissed.

[1] In this application, Ms Susanna Rossi claims she was unfairly dismissed by her employer New Era Disability Services Incorporated (NEDS /the respondent) on 17 May 2019 while working as a Support Worker at a residential home known as Opal House in Five Dock, New South Wales. Opal House is the home for three severely disabled residents. NEDS has objected to the application on the basis that Ms Rossi’s continuous service at the time her employment was terminated was less than the minimum period of employment 1 prescribed by the Fair Work Act 2009(Cth) (the Act).

[2] Ms Rossi commenced employment with NEDS on 28 June 2018 as a Support Worker on a part-time basis. Ms Rossi was initially employed for 21 hours a week, which reduced to 11 hours a week commencing 1 January 2019.

Prior to commencing with NEDS, Ms Rossi was employed on a casual basis by an organisation known as Support Independent Living Co-Operative (SILC) from 22 February 2018. That work was also undertaken at Opal House, with the same residents. Ms Rossi claims that her casual employment with SILC was on a regular and systematic basis, with a reasonable expectation of continuing employment by SILC on a regular and systematic basis.

[3] As stated, NEDS has objected to the application proceeding on the jurisdictional ground that the applicant has not completed the minimum employment period required to be served under the Act. NEDS submits that the applicant must complete one year’s continuous service with NEDS as it is a small business employer (as defined under the Act), 2, which at the time of her dismissal had not elapsed.

Minimum Employment Period

[4] Pursuant to s.382 of the Act, an employee is protected from unfair dismissal only if they have completed a period of employment of at least the minimum employment period.³ Section 382 of the Act states as follows:

“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 ...”

(My underline)

[5] The terms “minimum employment period” and “period of employment” are defined in ss.383 and 384 of the Act. In relation to the minimum employment period, s.383 states as follows:

“383 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.”

(My underline)

[6] To uphold the respondent’s jurisdictional objection, it is necessary first to determine whether NEDS is a small business employer. As can be seen from s.383, the relevant minimum employment period is one year, whereas a period of six months’ continuous service is required where the employer is not a small business employer.

[7] Section 23 of the Act defines a small business in the following manner:

“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.”

(My underline)

[8] The respondent states it has 13 employees, nine permanent and four casuals. The applicant accepted that the commencement of employment of a new House Manager occurred on 27 May 2019, as evidenced in the affidavit of charity auditor Kylie Wee, which was after Ms Rossi’s dismissal on 17 May 2019. Therefore, the new House Manager is not included in the employee count.

[9] The respondent has accepted that its original employee numbers did not include the applicant herself, even though this is required by s.23(4) of the Act (extracted above). That subsection makes clear that in counting the number of employees, the number is to include the employee being dismissed. This takes the respondent’s employees at the relevant time to 14. Even if the included four casual employees are employed on a regular and systematic basis as per s.23(2)(b) of the Act, the number of employees is fewer than 15, making the respondent a small business employer. Ms Rossi’s period of employment with NEDS is approximately 10.5 months, which is not sufficient on its own to meet the one-year minimum for a small business employer.

[10] Section 23(3) of the Act states that associated entities are to be included in calculating the number of employees. The respondent states that there are no associated entities and no other employees to be counted. The applicant submits that Cossie Pty Ltd is an associated entity of NEDS, which is discussed in more detail below. However, Cossie Pty Ltd does not have any employees.

[11] In view of the established employee numbers above, the applicant accepted during the hearing that the respondent was a small business employer. Hence, Ms Rossi must have completed one year’s continuous service to be protected from unfair dismissal.

[12] I therefore turn to calculating Ms Rossi’s period of employment. If it includes her employment with SILC, it will exceed the minimum one-year threshold required to file an unfair dismissal application, given NEDS was a small business employer at the relevant time.

[13] The definition of an employee’s period of employment is contained at s.384 of the Act:

“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.”

(My underline)

[14] Ms Rossi claims her continuous service includes her employment at SILC as a casual engaged on a regular and systematic basis, with a reasonable expectation of continuing employment by SILC on a regular and systematic basis. There was nothing put to dispute that Ms Rossi’s casual employment with SILC was other than on a regular and systematic basis, with a reasonable expectation of continuing employment. On this basis, I am satisfied that Ms Rossi meets the requirements of s.384(2)(a) of the Act above.

[15] In respect of s.384(2)(b) of the Act, Ms Rossi claims that she is a transferring employee, and that her period of employment with SILC should therefore be included in the calculation of her period of continuous service. This submission requires an examination of the operation of sub-s.384(2)(b)(i-iii) of the Act in relation to NEDS being the new employer and SILC being the old employer.

[16] Before considering sub-s.384(2)(b)(i) of the Act, it is relatively easy to first deal with sub-ss. 384(2)(b)(ii) and (iii).

[17] Subsection 384(2)(b)(ii) states that for an employee’s service with the old employer to be counted in the period of employment, the old employer and the new employer are not associated entities when the employee becomes employed by the new employer. It was not put by either party that the old and new employer were associated entities.

[18] Subsection 384(2)(b)(iii) of the Act states that for the employee’s service with the old employer not to be counted in the period of employment, the new employer must have informed the employee in writing before the new employment started that the period of service with the old employer would not be recognised. Ms Rossi states that this did not occur. NEDS did not dispute this, with Mr Pisanu submitting that this did not occur as there was no transfer of business.

[19] Having regard to the above conclusions, this only leaves sub-s.384(2)(b)(i) to be considered in determining whether to include Ms Rossi’s period of service with SILC when calculating her continuous service for the purposes of the minimum employment period.

s.384(2)(b)(i): the employee is a transferring employee in relation to a transfer of business from an old employer to a new employer; and …

[20] In considering this subsection, the meaning of the phrases “transferring employee” and “transfer of business” need to be established.

[21] Section 12 (The Dictionary) of the Act, provides definitions of both a ‘transferring employee’ and a ‘transfer of business’ as follows:

“‘transfer of business’:

(a) for a transfer of business between a national system employer and another national system employer— see subsection 311(1);”

‘transferring employee’:

(a) in relation to a transfer of business referred to in Part 2-8— see subsection 311(2).

Transfer of Business

[22] Section 311 of the Act is in the following terms:

“311 When does a transfer of business occur

Meanings of transfer of business, old employer, new employer and transferring work

(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.”

(My underline)

[23] To establish that Ms Rossi is a transferring employee, her employment with the old employer must have been terminated. I do not accept, as put by NEDS, that the employment of Ms Rossi’s employment by the old employer SILC has not been terminated. While Ms Rossi was a casual employee of SILC, the fact that she did not require notice of termination does not alter the evidence of Ms Rossi that she was no longer offered shifts by the old employer after commencing with NEDS. The employment of Ms Rossi with the old employer did not continue as no further work was offered. I am thus satisfied that her employment with the old employer has terminated.

[24] It is accepted that Ms Rossi was employed by the new employer (NEDS) within three months after her termination, and that Ms Rossi’s work as a part-time Support Worker for NEDS is the same, or substantially the same, as the work she performed for SILC.

[25] Thus, Ms Rossi meets the requirements of ss.311(1)(a), (b) and (c) of the Act. She is therefore a transferring employee as per s.311(2) of the Act.

[26] The next requirement to be satisfied is s.311(1)(d) – is there a connection between the old employer and the new employer as described in any of subsections (3) to (6)? These subsections are dealt with below.

Section 311(3): Transfer of assets from old employer to new employer

[27]This subsectionrequires there to be 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.

[28] For Ms Rossi to be protected from unfair dismissal, she not only needs to be a ‘transferring employee’, which has been established to my satisfaction, but there also needs to be a transfer of business that involves a ‘connection’ between the old and new employer (or associated entities thereof), in accordance with an ‘arrangement’ relating to the transfer of some or all of the assets the old employer or new employer (or associated entities) owns or has the beneficial use of.

[29] The applicant states that the assets that relate to the transferring work are Opal House at Five Dock and a motor vehicle. The respondent denies that Opal House and a motor vehicle are assets that relate to the transferring work and further says that there was no arrangement relating to a transfer of assets.

[30] It is thus necessary to examine the meaning of the word ‘arrangement’ to arrive at a conclusion as to whether there was a transfer of business.

[31] In the decision of Peter Zabrdac v Transclean Facilities Pty Ltd, 4 Bissett C examined the Explanatory Memorandum to the Fair Work Bill 2008 and cases where the word ‘arrangement’ was considered. In the decision, Bissett C made the following observations:

“[66]The word ‘arrangement’ is not defined in the Act. The Explanatory Memorandum to the Fair Work Bill 2009 states that ‘the word arrangement is intended to be interpreted broadly.’ This does not, however, suggest that it should be given a loose form. It must be a term that has some meaning.

[67]The definition of ‘arrangement’ in the Macquarie Dictionary is of little assistance although I agree with the Applicant that ‘arrange’ is defined as ‘to come to an agreement’. An agreement, however, is defined as ‘the act of coming to a mutual arrangement’ or ‘the arrangement itself’, which does not assist.

[68]The word ‘arrangement’ has been judicially considered, primarily in the context of trade practices and taxation matters. While there appears to be no consideration of the term ‘arrangement’ in a transfer of business context in the Act, guidance as to the use and meaning of the word can be found in these decisions.

[69]In Australian Competition & Consumer Commission v CC (NSW) Pty Ltd 5Lindgren J considered the meaning of the phrase ‘arrangement or understanding’ as it appears in s.45(2) of the Trade Practices Act 1974 (Cth). His Honour considered a number of decisions on the meaning of the word ‘arrangement’:

In Newton v Federal Commissioner of Taxation (1958) 98 CLR 1 the Privy Council was concerned with the expression “[e]very contract, agreement, or arrangement” in s 260 of the Income Tax and Social Services Contribution Assessment Act 1936 (Cth), and expressed the opinion (at 7):

“that the word ‘arrangement’ is apt to describe something less than a binding contract or agreement, something in the nature of an understandingbetween two or more persons - a planarranged between them which may not be enforceable at law.” (Emphasis added.)

Clearly, the scope of ss 45(2) and 45A(1) with which I am concerned extends beyond legally enforceable agreements, that is, contracts.

In British Basic Slag Ltd v Registrar of Restrictive Trading Agreements [1963] 1 WLR 727; [1963] 2 All ER 807, the English Court of Appeal had to consider the meaning of the expression “any agreement or arrangement, whether or not it is or is intended to be enforceable” in s 6 of the Restrictive Trade Practices Act 1956 (UK). It was argued that the trial Judge had erred in holding that an arrangement within the meaning of the expression exists when, by communications between the parties, “each has intentionally aroused in the other an expectation that he will act in a certain way”. It was submitted that the expression also required “that there must be mutuality in the acceptance of rights and obligations”. In the Court of Appeal, Willmer LJ said (at 739; 814):

“ ..., I think it is highly significant that Parliament did not see fit to include any definition of ‘arrangement.’ I infer from this that it was intended that the word should be construed in its ordinary or popular sense. Though it may not be easy to put into words, everybody knows what is meant by an arrangement between two or more parties. If the arrangement is intended to be enforceable by legal proceedings, as in the case where it is made for good consideration, it may no doubt properly be described as an agreement. But the Act of 1956 clearly contemplates that there may be arrangements which are not enforceable by legal proceedings, but which create only moral obligations or obligations binding in honour. This seems to me to be entirely consistent with the dictum of Upjohn J. to which I have already referred. Nor do I consider that there is any inconsistency between that and the view expressed by the judge in the present case. For when each of two or more parties intentionally arouses in the others an expectation that he will act in a certain way, it seems to me that he incurs at least a moral obligation to do so. An arrangement as so defined is therefore something ‘whereby the parties to it accept mutual rights and obligations.’”

In the same case, Diplock LJ said that there were many ways in which arrangements might be made and (at 747; 819):

“[I]t is sufficient to constitute an arrangement between A and B, if (1) A makes a representation as to his future conduct with the expectation and intention that such conduct on his part will operate as an inducement to B to act in a particular way, (2) such representation is communicated to B, who has knowledge that A so expected and intended, and (3) such representation or A’s conduct in fulfilment of it operates as an inducement, whether among other inducements or not, to B to act in that particular way.”

In Top Performance Motors Pty Ltd v Ira Berk (Qld) Pty Ltd (1975) 24 FLR 286, a Full Court of this Court had to consider the expression “a contract, arrangement or understanding to the extent that it is in restraint of trade or commerce” in the then s 45(2)(b) of the Act. Smithers J referred to Newton and British Basic Slag and said (at 291) of the expression “arrangement”, that by parity of reasoning with British Basic Slag:

“ ... the existence of an arrangement of the kind contemplated in s.45 is conditional upon a meeting of the minds of the parties to the arrangement in which one of them is understood, by the other or others, and intends to be so understood, as undertaking, in the role of a reasonable and conscientious man, to regard himself as being in some degree under a duty, moral or legal, to conduct himself in some particular way, at any rate so long as the other party or parties conducted themselves in the way contemplated by the arrangement.”

His Honour added (at 291):

“Where the minds of the parties are at one that a proposed transaction between them proceeds on the basis of the maintenance of a particular state of affairs or the adoption of a particular course of conduct, it would seem that there would be an understanding within the meaning of the Act.”

In Trade Practices Commission v Nicholas Enterprises Pty Ltd(No 2) (1979) 40 FLR 83, Fisher J considered the notion of a “contract, arrangement or understanding” in the context of s 45 of the Act. After setting out certain passages from the cases, his Honour concluded (at 89):

“A significant feature of each of the above passages is the emphasis placed upon the necessity for each of the parties to have communicated with the other, for each to have raised an expectation in the mind of the other, and for each to have accepted an obligation qua the other. These are in my opinion the essential elements of the requisite meeting of minds.” (Emphasis supplied.)

(His Honour appears to have seen the words “arrangement” and “understanding” as synonymous in the present context, as Toohey J seems to have done in Hughes v Western Australian Cricket Association (Inc) (1986) 19 FCR 10 at 32.)

...

The cases require that at least one party “assume an obligation” or give an “assurance” or “undertaking” that it will act in a certain way. A mere expectation that as a matter of facta party will act in a certain way is not enough, even if it has been engendered by that party. In the present case, for example, each individual who attended the Meeting may have expected that as a matter of fact the others would return to their respective offices by car, or, to express the matter differently, each may have been expected by the others to act in that way. Each may even have “aroused” that expectation by things he said at the Meeting. But these factual expectations do not found an “understanding” in the sense in which the word is used in ss 45 and 45A. The conjunction of the word “understanding” with the words “agreement” and “arrangement” and the nature of the provisions show that something more is required. With respect, the first passage set out above from the judgment of Smithers J in Top Performance Motors, although addressing the term “arrangement”, seems to me to describe appropriately that further necessary element of the “understanding” to which the provisions refer.

[70]In Pullen v R & C Products Pty Ltd and Another Marks J considered the meaning of the word ‘arrangement’ in the context of s.275 of the Industrial Relations Act 1991 (NSW), which states in part that the ‘Industrial Court may make an order declaring wholly or partly void or varying,...any contract or arrangement...under which a person performs work.’ His Honour found that:

The meaning of “arrangement” was discussed by the former Industrial Commission in Court Session in Custom Credit Corporation Ltd v Goldsmith [1976] AR (NSW) 98. The usual meaning of “arrangement” was said to be one which is in the nature of a bargain, which involved a degree of understanding but which may not satisfy the legal requirements of certainty as to terms so as to amount to a contract, or indeed even an agreement.

[71]In The Commissioner of Taxation of The Commonwealth of Australia v K. Porter & Co. Pty. Ltd Mahoney J considered the meaning of the term ‘arrangement’:

In the case as conducted before me and before the board of review, argument took place, first, as to the meaning of the term “arrangement” and, second, as to the evidence to which reference may properly be made in determining whether there is an arrangement and (if there is) what are its terms.

[72]His Honour found that

In Newton v. Federal Commissioner of Taxation it was said: “ Their Lordships are of opinion that the word ‘ arrangement ̕ is apt to describe something less than a binding contract or agreement, something in the nature of an understanding between two or more persons—a plan arranged between them which may not be enforceable at law. But it must in this section comprehend, not only the initial plan, but also all the transactions by which it is carried into effect—all the transactions, that is, which have the effect of avoiding taxation, be they conveyances, transfers or anything else. It would be useless for the commissioner to avoid the arrangement and leave the transactions still standing. The word ‘ purpose ̕ means not motive, but the effect which it is sought to achieve—the end in view. The word ‘ effect ̕ means the end accomplished or achieved. The set of words denotes concerted action to an end—the end of avoiding tax.”

In my opinion, the term “arrangement” as used in s80B (5) includes “an understanding” or “a plan” which may not be enforceable in law and would include, inter alia, the legally effective acts which are done in the carrying out of that plan or arrangement.

[73]The decision in Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 2) reached a similar conclusion.”

[References and footnotes omitted].

[32] The Commissioner then summarised the above case history by stating:

“[74] These decisions provide authority for the proposition that an arrangement, whilst not necessarily legally enforceable, requires:

•  That there be communication between the parties to the arrangement; and

•  That the parties must reach some understanding; and

•  That there is some expectation that each of the parties will behave in a particular way.

[75]An arrangement is not an expectation that a party will behave in a particular way and it cannot be contrived. It requires some substance.”

[33] The meaning of ‘arrangement’was also traversed in the Full Bench decision of John Lucas Hotel Management Services T/A World Square Pub v Hillie. 6In this decision, the Full Bench stated that the word ‘arrangement’, while it should to be interpreted broadly and need not imply a legally enforceable agreement between the two parties, must still be given some content; one party must have assumed at least a moral obligation, or given an assurance or undertaking.7

[34] The respondent states that it is a start-up organisation incorporated as a ‘charitable not for profit organisation’, which has no association with SILC. SILC did not participate in the hearing and no material was provided as to any handover from SILC to NEDS in providing the in-house services.

[35] The directors of NEDS include Ostilio Pisanu and Corinne Pisanu, who both appeared for the respondent. All seven board members/Directors of NEDS are volunteers and receive no remuneration. It was stated that SILC, for whom the applicant previously worked, provided one month’s notice to the parents of the three 8 residents of the home that they would stop being a service provider around early July 2019. The Pisanus became aware of this as Mrs Pisanu’s disabled son is a resident of Opal House. Mrs Pisanu stated that she owns Opal House through a company known as Cossie Pty Ltd, which is the accommodation provider. Cossie Pty Ltd does not employ any staff. Cossie Pty Ltd is an NDIS-registered provider, which now provides in-house support services. Its two directors are Mr and Mrs Pisanu.

[36] Mrs Pisanu’s disabled son wished to move out of the family home and Opal House was provided by Mrs Pisanu for this purpose. Two other disabled residents also occupy Opal House and provide companionship to the other residents. The residents of Opal House all suffer from severe disabilities and require 24/7 care. The Pisanus provide the accommodation to the residents at no cost, on a philanthropic basis. The residents are not required to reside at Opal House for the purposes of the National Disability Insurance Scheme (NDIS).

[37] NEDS was registered with the Australian Charities and Not-for-profits Commission on 2 May 2018. Participate Australia provided the disability services as NEDS was not at the time an accredited provider. NEDS supply the labour which provides the disability services at Opal House. Supported Independent Living funding is allocated to the NDIS participant, being the person with the disability.

[38] Mrs Pisanu explained that SILC provides supported independent living services i.e. in-home support. It did not provide nor have any obligation to provide the accommodation for residents at Opal House. It can deliver in-house support to residents at any home owned, rented or provided for the benefit of or by an NDIS participant, or the home could be supplied by a disability organisation. Mrs Pisanu submitted that what SILC did in providing in home support was no different to a cleaner or gardener carry out their in any home.

[39] Cossie Pty Ltd is an NDIS-registered provider and has outsourced the provision of in-house support to NEDS. This was done because NEDS is now a registered charity which can provide salary packaging to employees, which Cossie Pty Ltd could not offer. The retention of staff is an important factor in providing in-house support and providing salary packaging assists with this.

[40] The staff at Opal House use a motor vehicle owned by Cossie Pty Ltd to be used by the residents for community participation i.e. to take its residents to appointments, participate in social activities, and attend day programs. Mrs Pisanu submitted that these activities were not the role of SILC.

[41] Ms Rossi confirmed that the motor vehicle was used by SILC. She submits SILC therefore had the beneficial use of the vehicle, although it was not required to provide any transport services.

[42] Opal House and the motor vehicle are not assets of NEDS. Both the motor vehicle and Opal House are owned by Cossie Pty Ltd. It therefore needs to be ascertained whether Cossie Pty Ltd is an associated entity of NEDS.

[43] Section 12 of the Act defines ‘associated entity’ as follows:

“‘associated entity’ has the meaning given by section 50AAA of the Corporations Act 2001.”

[44] Sections 50AAA and 50AA of the Corporations Act 2001 (Corporations Act) provide as follows:

“50AAA Associated entities

(1) One entity (the associate) is an associated entity of another entity (the principal) if subsection (2), (3), (4), (5), (6) or (7) is satisfied.

(2) This subsection is satisfied if the associate and the principal are related bodies corporate.

(3) This subsection is satisfied if the principal controls the associate.

(4) This subsection is satisfied if:

(a) the associate controls the principal; and

(b) the operations, resources or affairs of the principal are material to the associate.

(5) This subsection is satisfied if:

(a) the associate has a qualifying investment (see subsection (8)) in the principal; and

(b) the associate has significant influence over the principal; and

(c) the interest is material to the associate.

(6) This subsection is satisfied if:

(a) the principal has a qualifying investment (see subsection (8)) in the associate; and

(b) the principal has significant influence over the associate; and

(c) the interest is material to the principal.

(7) This subsection is satisfied if:

(a) an entity (the third entity) controls both the principal and the associate; and

(b) the operations, resources or affairs of the principal and the associate are both material to the third entity.

(8) For the purposes of this section, one entity (the first entity) has a qualifying investment in another entity (the second entity) if the first entity:

(a) has an asset that is an investment in the second entity; or

(b) has an asset that is the beneficial interest in an investment in the second entity and has control over that asset.

50AA Control

(1) For the purposes of this Act, an entity controls a second entity if the first entity has the capacity to determine the outcome of decisions about the second entity’s financial and operating policies.

(2) In determining whether the first entity has this capacity:

(a) the practical influence the first entity can exert (rather than the rights it can enforce) is the issue to be considered; and

(b) any practice or pattern of behaviour affecting the second entity’s financial or operating policies is to be taken into account (even if it involves a breach of an agreement or a breach of trust).

(3) The first entity does not control the second entity merely because the first entity and a third entity jointly have the capacity to determine the outcome of decisions about the second entity’s financial and operating policies.

(4) If the first entity:

(a) has the capacity to influence decisions about the second entity’s financial and operating policies; and

(b) is under a legal obligation to exercise that capacity for the benefit of someone other than the first entity’s members;

the first entity is taken not to control the second entity.”

[45] Ms Rossi contends that Cossie Pty Ltd is an associated entity of NEDS on the basis that Ms Pisanu is a Director of both corporations, as well as being the owner of Opal House. 9

[46] To ascertain whether Cossie Pty Ltd has any control over NEDS, it must be demonstrated that Cossie Pty Ltd has the capacity to determine the outcome of decisions about NEDS’ financial and operating policies. While the two directors of Cossie Pty Ltd are on NEDS’ board of directors, they are only two of the seven directors. Nothing was put in evidence or by way of submissions to demonstrate that the Pisanus, as directors of Cossie Pty Ltd control the board of NEDS where the operations, resources or affairs of NEDS are material to Cossie Pty Ltd. 10 Nor was there any evidence that NEDS controls Cossie Pty Ltd.

[47] It was not demonstrated that either Cossie Pty Ltd or NEDS has the capacity to determine the outcome of decisions about each other’s financial and operating policies. 11 There was no evidence produced of any practice or pattern of behaviour relating to financial and operating policies to be taken into account.

[48] Ms Rossi, other than to state that the two bodies share two common directors, was unable to show that any control was exercised by one body over the other in the face of the denial by the Pisanus that there was any influence of one over the other.

[49] The Commission is therefore unable to conclude in accordance with the requirements of the Corporations Act that Cossie Pty Ltd is an associated entity of NEDS.

[50] Further, there was nothing before the Commission to support a conclusion, as is required by s.311(3) of the Act, that there was an ‘arrangement’, i.e. that SILC and Cossie Pty Ltd had reached some understanding regarding the ‘assets’, even accepting that Opal House and/or the motor vehicle were assets relating to or used in connection with the transferring work.

[51] Since the Commission is not satisfied that Cossie Pty Ltd is an associated entity of the new employer, NEDS, s.311(3) of the Act in relation to transferring assets is not met. It is therefore necessary to consider whether a connection between the old employer and the new employer has occurred under ss.311(4), (5) or (6), resulting in a transfer of business.

Section 311(4): Old employer outsources work to a new employer

[52] This subsection establishes a connection between the old employer and the new employer as per s.311(1)(d), if the transferring work is outsourced to the new employer. Neither party suggested that this was the case.

Section 311(5): New employer ceases to outsource work to old employer

[53] This subsection establishes a connection between the old employer and the new employer if the transferring work is performed by a transferring employee because the new employer outsourced the work to the old employer and had ceased to outsource the transferring work. Again, neither party suggested that this was the case.

Section 311(6): New employer is associated entity of old employer

[54] It has not been established that NEDS is an associated entity of SILC as per the Corporations Act. It was established to the Commission’s satisfaction that SILC did not exercise any influence of significance or control over NEDS. No other factor that meets the definition of associated entity as per the Corporations Act was established to exist.

Conclusion

[55] On the basis of the findings above, the Commission is unable to include Ms Rossi’s period of employment with SILC when calculating whether she completed the minimum employment period, as there has not been a transfer of business in accordance with ss.384(2)(b)(i) and 311 of the Act. As such, Ms Rossi had not completed the one-year minimum employment period that s.383(b) of the Act requires when employed by a small business employer for her to be protected from unfair dismissal.

[56] The application is therefore dismissed for want of jurisdiction.

DEPUTY PRESIDENT

Appearances:

S Rossi, the applicant, in person.

O Pisanu and C Pisanu for New Era Disability Services Incorporated.

Hearing details:

Sydney.

2019.

September 17.

October 17.

Printed by authority of the Commonwealth Government Printer

<PR714272>

 1   Fair Work Act 2009 s.383.

 2   Fair Work Act 2009 s.23.

3 In addition to other stipulated requirements under the Act.

 4   [2011] FWA 4492.

 5 (1999) 92 FCR 375.

 6   [2013] FWCFB 1198.

 7 Ibid [20].

 8   Initial documents filed refer to four residents.

 9   Written submissions of 14 October 2019.

 10   Corporations Act 2001 s.50AAA(4).

 11   Corporations Act 2001 s.50AA(2).